June 25, 2019
We should all take a moment right now to reflect on something involving our friends in the ATA: They represent professional athletes.
Is there a situation in sports where a single agency like Endeavor represents 2 or more players on a single team? Absolutely there is. Does that agency then get paid 3% of the team’s player budget, 3% of the team salary cap deferred to the end of the season, and 10% of the team’s ongoing profits for all eternity?
Of course not.
But WHY not?
In 1986, the National Basketball Players Association (NBPA) faced a situation identical in many ways to the WGA’s situation with the ATA today; as the federally recognized labor union representing the professional basketball players employed by the NBA, the NBPA had the exclusive authority to negotiate minimum player salaries, pension benefits, health insurance, grievance-arbitration procedures, maximum team payrolls, procedures for the college draft, the ability of players to move from team to team, players’ playoff compensation, travel accommodations, playing conditions, medical treatment and licensing rights. That should sound familiar because the WGA does most of those same things (membership units substituting for the college draft).
Like other sports and entertainment unions (like the WGA), the NBPA believed that “the collective good of the entire represented group was maximized when individualized salary negotiations occurred within a framework that permitted players to exert leverage based on their unique skills and personal contributions.” In other words, Shaquille O’Neal shouldn’t be held at minimum salary, he should be allowed to negotiate for more, and because of his superior performance, he is able to get more. And when Shaq gets more, it creates upward pressure on wages for every other player and upward pressure on team salary caps.
The NBPA, therefore, authorized players or their individually selected agents to negotiate individual compensation packages.
Here’s where it gets relevant to the ATA fight: basketball player agents were unregulated by the NBPA before 1986. By the mid-1980s, a substantial number of players had complained to the officers of the NBPA about agent abuses, such as agents imposing high and non-uniform fees for negotiation services, insisting on the execution of open-ended powers of attorney giving the agents broad powers over players’ professional and financial decisions, failure to keep players apprised of the status of salary negotiations with NBA teams, failure to submit itemized bills for fees and services, and many agents had conflicts of interest arising out of representing coaches and/or general managers of NBA teams while they were simultaneously representing players.
You know, the way the ATA does when they rep a POD and a writer. Or when they take packaging fees on the back end from our employers. Or when they start an “independent affiliated production company” and serve as both our employer AND our agent, working both sides of the negotiation.
Basketball players had additional problems we don’t; some agents had signed players to unbreakable long-term agreements. Other agents offered money and other inducements to players, their families, and their coaches to obtain player clients. But the general shape of the fight was over the same thing; Fiduciary Duty.
In response to these complaints from their members about these abuses, the NBPA established “the Regulations,” a comprehensive system of agent certification and rules, to ensure that players would receive agent services that meet minimum standards of quality at uniform rates.
First, the Regulations provided that a player agent may not conduct individual contract negotiations unless he signs the “Standard Player Agent Contract” promulgated by the Committee. The “Standard Player Agent Contract” limits player agent fees by prohibiting any fee or commission on any contract which entitles the player to the minimum salary and by limiting agent fees on all contracts.
WAIT. WHAT? YEAH.
Think about THAT for a second; NBA players who work for Union Scale Minimum DO NOT GET COMMISSIONED. Why? Because that freaking wage was set by the freaking Union, and if some dirtbag agent wants a piece of it, he’d damn well better get in there and negotiate some over-scale income! Imagine if the WGA’s Code of Conduct had imposed these rules — 70% of TV Writers wouldn’t be paying commission! Imagine the bloodcurdling cries as the ATA was suddenly held to the same standard that the basketball players hold them to. You want some money, buddy? GO NEGOTIATE. Do your job, sponger.
The next time the ATA squawks about our Code of Conduct, we should add this kind of clause to our COC: no commission on Guild Scale jobs. You think they’d suddenly figure out how to negotiate above-scale income again? Yeah, overnight they would.
“The Regulations” also contained a “Code of Conduct” which specifically prohibited an agent from providing or offering money or anything of value to a player, a member of a player’s family or a player’s high school or college coach for the purpose of inducing the player to use that agent’s services. Again, we don’t have that problem… but the NBPA’s Code of Conduct also prohibits agents from engaging in conduct that constitutes an actual or apparent conflict of interest (such as serving as an agent for a player while also representing an NBA team, general manager or head coach), and “engaging in any unlawful conduct involving dishonesty, fraud, deceit, misrepresentation, or engaging in any other conduct that reflects adversely on his fitness to serve in a fiduciary capacity as a player agent or jeopardizes the effective representation of NBA players.”
So again, let’s pause in the story; ANY dishonesty, fraud, deceit or misconduct on ANY client gets that agent bounced from the ability to represent basketball players. Do you think that the sports agents took this lying down? They did not. Several of them sued. More on the most important of them in 3 paragraphs.
Finally, after unilaterally promulgating “The Regulations,” the NBPA obtained, in collective bargaining, the NBA’s agreement to prohibit all member teams from negotiating individual player salary contracts with any agent who was not certified by the NBPA.
So when people cry “WHY NOW?! WHY NOW ARE WE FIGHTING THIS FIGHT WITH THE ATA WHEN THE AMPTP IS NEXT YEAR!?” They are missing this key point; we had to establish the Code Of Conduct -prior- to our fight with the AMPTP. If it didn’t already exist, it wouldn’t be a subject of mandatory bargaining and the AMPTP wouldn’t have to discuss it with us, which would dramatically weaken our case with the agents.
Speaking of agents… enter Thomas Collins, sports superagent.
Collins was an agent for several NBA players starting in 1974. In 1986, Collins applied for and received certification to be a basketball player agent after “The Regulations” took effect. Then in 1987, Kareem Abdul-Jabbar, a player Collins represented for over a decade sued Collins. Abdul-Jabbar alleged that Collins had committed numerous serious breaches of the fiduciary duty he owed as an agent to Abdul-Jabbar, including mishandling of Abdul-Jabbar’s federal and state income tax returns which caused Abdul-Jabbar to pay $300,000 in interest charges and late penalties; improvidently investing Abdul-Jabbar’s money; mismanaging Abdul-Jabbar’s assets; and transferring funds from Abdul-Jabbar’s accounts without permission to the accounts of other players who were also Collins’ clients. Collins chose to voluntarily stop representing basketball players until the trial ended, but retained his agent certification with the Players Association. He lost his certification for not attending an agent seminar in 1988, but he was already voluntarily not representing players, so it wasn’t that big a deal.
Collins eventually settled with Abdul-Jabbar, and in 1990, Collins submitted an application to be recertified as a player agent. His application noted that there was still pending against him another lawsuit filed by another NBA player, Lucius Allen. The players union investigated, and found that Collins had hidden all details of the Abdul-Jabbar & Allen cases by settling but binding the players with confidential non-disclosure clauses. They asserted the way he had violated his fiduciary duty to multiple players in his business dealings was enough to ban him from certification, regardless of the eventual legal settlements hidden by confidentiality clauses (Collins tried to argue that the players settled, therefore he was innocent, but he also refused to release any of the court documents about the case which would have shown exactly what he did or didn’t agree he had done).
And here’s where we come back to the WGA vs. the ATA. Because Collins sued. And you’re going to find his legal reasoning to be VERY familiar;
“Collins claims that the actions of the NBPA violate the Sherman Act and cannot be justified under labor exemptions. He claims the Defendants’ actions create a group boycott against him and constitute a per se violation of the Sherman Act by restraining him from representing individual basketball players in salary negotiations with their teams. In effect, Collins contests the union’s monopolization of the representation of basketball players in their negotiations with NBA teams. He further alleges that the NBPA has waived any right to assert a labor exemption because it did not regulate Collins until 1986. Finally, Plaintiff alleges tortious interference with contracts and interference with prospective business advantage.”
From WME’s lawsuit yesterday;
“WGA’s leadership, however, has orchestrated a series of anticompetitive agreements to prevent WME (and other talent agencies) from representing writers if the agencies (i) do not stop their long-accepted, industry-standard practice of “packaging” talent to studios in exchange for packaging fees, and (ii) do not stop affiliating with companies that produce or distribute content. […] WGA has organized an unlawful group boycott to prevent WME from continuing to represent WGA member-writers. […] [the WGA’s] group boycott, which stifles competition, as well as competition in the market to represent writers, is a classic, per se violation of the antitrust laws. […] Up until April 12, 2019, WGA had expressly permitted packaging for more than forty years.”
So, essentially WME filed the same lawsuit as Thomas Collins did, asserting that (1) our union doesn’t have the monopoly power over representing writers, (2) doesn’t have the right to prohibit or regulate who represents our members, (3) doing so is a monopolistic violation of the Sherman Anti-Trust Act, (4) violating fiduciary duty is just fine because they’ve been doing it for SO LONG and if we really cared, we would have stopped them earlier, (5) it’s established business practices and the Guild is breaking the law trying to stop them.
The judges laughed Thomas Collins out of court.
In every case, they upheld the union’s assertions that they were the sole bargaining agent for union members and as such, had the right to establish a set of rules for representing those players.
Not only did they laugh Thomas Collins out of court, they NAMED THE NEW LAW AFTER HIM. A “Collins Clause” is an agreement a union demands from its employers allowing them to ban fraudulent agents who have violated their fiduciary duty. In the next few years, the National Football League players, National Hockey League Players, National Baseball League Players, and even our lame-ass men’s national soccer team (among others) got identical Collins Clauses.
Those clauses, and the bans associated with them, have been challenged in court over 20 times using all sorts of rationales. Challengers have lost every time. The law is clear. The WGA has the right to do what it has done.
And Endeavor KNOWS THIS. They know it because they’re subject to all these sorts of regulations and restrictions in order to represent athletes, which is supposedly 25% of their agenting business. WME -KNOWS- that if they get Union Scale for a client they don’t get paid jack shit. Does anyone here believe any of their athletes are working for scale? So why were 70% of their (former) TV writer clients?
It has taken the WGA this long to impose a Code Of Conduct and to demand a Collins Clause for a number of reasons… but fear of losing this case to the WME or CAA or any other bunch of CHUDS who want to pile on should not be a cause of concern for anyone here.
I don’t know what’s wrong with WME’s attorneys. This case will DEFINITELY go down in flames, and it will hurt their stance in the Guild’s case. Perhaps it’s a stalling tactic, perhaps its PR for their IPO roadshow so they can claim they’re going to defeat us in court so please don’t notice that 25% of our clients have just fired us and another 50% will do so immediately after this case ends (actors, directors). It’s just idiotic… the Guild’s case was a long and involved one requiring a lot of parsing of individual cases and complex contractual matters. This one is pretty open-and-shut. If I thought there was any chance in hell of an open-and-shut case verifying the underlying arguments of a long-term case in which I might be at risk of BILLIONS of dollars in clawbacks and penalties, I would kill any attorney who suggested that I file that short-term case. But that’s me, I’m not blinded by a $10B IPO.