Sunday, April 15, 2012

Book Review: Illegal Procedure

What to make of Illegal Procedure: A Sports Agent Comes Clean on the Dirty Business of College Football? Said agent, whose co-writer was James Dale (not to be confused with Jim Dale, the U.S. Harry Potter books reader), is Josh Luchs. We learned the basic outline of Luchs's story in this SI article from October 2010 written by George Dohrmann, who also wrote the foreword for Illegal Procedure.

Most of the book tells the tale of Luchs's career, how he started off as a sports-mad kid in Beverly Hills, then worked as a Raiders ballboy, and eventually turned into an agent beginning with Pro Bowl DE Greg Townsend. For most of his career Luchs was more of a runner than an agent, generally working with a more experienced partner-Neil Allen, Doc Daniels, Gary Wichard, and finally Steve Feldman before a dispute with Wichard ended up with his agent certification revoked for a year by the NFLPA. Runners vary in degree of respectability and professionalism; by being a certified agent who's never spent time in jail, Luchs probably ranked on the higher end of the spectrum. There are some interesting stories in here, such as Mel Kiper's relationship with the now-deceased Wichard and how Luchs and Wichard used to fake or otherwise alter information for the recruiting playbooks for players, but I didn't get many lasting lessons out of it. At multiple points in Luchs's tale he does talk about the personal traits that made him as successful as he was (he was an agent for almost 20 years, which per se indicates a certain level of success), which just re-confirmed in my mind how unsuitable trying to be a sports agent would've been for me.

The lasting takeaway from Illegal Procedure, if there will be one, comes from the sentence SI stuck on their cover, "I will never forget the first time I paid a player..." The final chapter of the book asks "Can This Sport Be Saved?" and includes a couple recommendations by Luchs.

The fundamental problem is that good football players go from having a legal market value of $0 so long as they have eligibility remaining to a legal market value greater than that when their legal eligibility expires (including when they voluntarily cede any remaining eligibility). You don't have to be familiar with the life-cycle hypothesis from economics to predict that this is an inherently unstable system which people like Luchs (and he wasn't the only agent or agent-affiliated person paying players) could exploit.

The general scorn for this system is directed at the NCAA for imposing the cap on the legal market value at $0, and not without good reason. Since I'm trying not to go all Death to the BCS by writing another 4,000 word review, I'll simply stipulate here that the NCAA is not going to fundamentally change and start allowing every player to be paid what somebody, agent or not, is willing to pay them. (If I get around to it, one day I'll write about what a world where the NCAA gets rid of all amateurism restrictions might be like.) My preferred solution would be to sever the school-sports link completely. As Charles Clotfelter writes in Big-Time Sports in American Universities, though, schools are in general relatively happy with the role of athletics as it exists right now, and I recognize that's not a realistic solution.

Luchs categorizes his recommendations into two broad strokes: first, improving policing, and second, tweaking the system. There are a couple basic problems that have to be confronted to reach either goal. First, the NCAA is a voluntary association of member schools that only has the power the schools want to and can grant it. For some reason, those member schools aren't necessarily particularly interested in giving power to an organization devoted to constraining and punishing their missteps. Further, the NCAA can only deal with the information it gets; it's not a government and doesn't have governmental powers. I suspect the member schools could grant more sweeping powers to the NCAA than it currently possesses, but that gets us to a related problem.

The NCAA doesn't have the power to compel people acting outside the NCAA system. While Illegal Procedure exclusively talks about football, I'll start with a basketball example. One of the favored tricks for NCAA recruiting has been Big Booster of School X makes a donation to the Foundation related to the traveling team of Player Y, who somehow magically decides to attend School X. School X and Player Y are both subject to NCAA jurisdiction, but Big Booster and Foundation are both outside it. Unless Big Booster or Foundation somehow decides to reveal the arrangement on their own, the NCAA is stuck. For football examples of the same thing, take a look at either the payments made to Reggie Bush while at USC (see my review of Tarnished Heisman) or the Nevin Shaprio scandal at Miami. We only know about the Bush scandal because the wannabe agents forked over a ton of money and didn't get it back, while Shapiro was in jail. Similarly, Luchs only talked after he was out of the agent business and lost his certification. To use the parlance from Bruce Schneier's Liars and Outliers, we only know about these because they defected after leaving the community. Nobody defects before leaving the community, because doing so is essentially an announcement that you're leaving the community, and everybody in the community knows it.

There's yet another related problem, which is namely that for players, defection isn't really a big deal. Take, for example, the first player Luchs paid, Colorado defensive end Kanavis McGhee. Even if you think Taylor Branch's Atlantic article was a bit over the top, you'd probably agree with Luchs and McGhee there's nothing seriously morally wrong with McGhee advancing some of his future potential earnings to a time of need. McGhee ends up essentially stiffing Luchs, not signing with him, but even if Luchs had defected then, it's unlikely McGhee suffers any personal harm; NFL teams have indicated they don't care if a player has a personal problem with the NCAA's amateurism standards (wideout A.J. Green was suspended four games while at Georgia and still went fourth overall in the 2011 NFL draft). It would be difficult for the NCAA to come down harshly on a school for a single player's actions like that (thus the phrase "lack of institutional control" is the key to any relatively harsh NCAA punishment), and even then McGhee doesn't necessarily care that much. Luchs similarly has an incentive to defect (an edge on gaining McGhee as a client) and no strong incentive not to defect from the NCAA's rules.

McGhee's position outlines another of the key problems the NCAA has, namely the changing cast of characters. Going back to Schneier, you can have trust in a world of weak institutions where the members of the specific society are closely related and/or will have repeated interactions. A favorite example of this is the prevalence of Orthodox Jews in the diamond trade; there's not even an organization as heavily-involved and powerful as the NCAA that oversees the diamond trade's day-to-day affairs, but it still works because the members of the group trust the group's other members not to defect because of their shared beliefs. That's absolutely not true about college sports, as both Luchs and Reggie Bush show. USC didn't play in a bowl game following the recently-concluded 2011 season because of NCAA punishments arising in part from the actions of Reggie Bush while at USC. Said Reggie Bush just completed his sixth year in the NCAA, so why should he care? Bush's coach, Pete Carroll, meanwhile skedaddled out of town to a terrible job coaching the Seattle Seahawks that only pays him like $6.5 million a year.

USC gets punished because they're the only party who's still around, and the NCAA has to punish somebody if they want to try to prevent it from happening again. Controlling that behavior was nominally the job of USC's Compliance Department, but Luchs notes in the book he spent a lot of time around schools and never met anybody from Compliance until he started sitting on panels after he talked to Dohrmann. How schools treat their own Compliance Department resembles they treat the NCAA, as more of a necessary evil that limits the damage to schools than a proactive fighter against evil. One of Luchs's recommendations is that schools move Compliance out from under the aegis of Athletics or even the individual school, and put them on the NCAA payroll. It's a recommendation that comes from the right place, but I wonder how effective it will be. The key to effective Compliance includes a high level of trust between Compliance and coaches and athletes; removing them from Athletics and giving them real power makes them an outside authority to the coaches and athletes, and may only serve to make them more remote than they already are. Moving their budget out of Athletics but within the University, for instance to the President's office, can work, but only if the President is on board. As Clotfelter's book indicates, though, university presidents frequently use athletics for their own ends. Barring a major attitude change, I have a hard time seeing Compliance become a major factor.

The NFLPA isn't going to do something; as I said, nobody really cares about the NCAA's rules other than the NCAA. Some states have passed a version of the Uniform Athlete Agent Act; anybody familiar with NCCUSL will be unsurprised to learn not all states have passed it, and what's passed hasn't been the same in every state. Any enforcement act, to be effective, would have to be federal. Of course, there already is SPARTA, the Sports Agent Responsibility and Trust Act, which is so famous and well-enforced you hear about it approximately never. The NFLPA did last month institute one of Luchs's recommendations, dumping the Junior Rule, which was passed in an overreaction to the Reggie Bush affair.

One of the grayer areas is how agents and agent runners get access to players. Schools run their own Agent Day, where a bunch of agents come in and meet with a bunch of players briefly, sort of speed-dating for representation. As Luchs puts it, "Agent Day" is really any day he could meet with a player, and it's relatively easy to do that. Go to campus, track down somebody who knows the schedule of the person you want to meet (good athletes are local celebrities, it's not that hard), and find them; Luchs did it plenty of times and in the era of social networking it's even easier. Players are going to be able to meet agents and people who aren't agents themselves but have contacts with them. Some of those people are their head coaches, who all have agents and know agents themselves; Luchs writes about UCLA coach Terry Donahue basically stealing away wideout J.J. Stokes for his agent, Marvin Demoff. Nick Saban has a similarly enlightened policy, decrying all agents while somehow many Alabama players just happen to sign with Saban's agent, Jimmy Sexton. Luchs's suggestion is to pass a rule forbidding agents from representing coaches and players on the same team, which I think is (a) unrealistic and (b) unlikely to work given a coach could direct his players to a separate agent with whom he is affiliated or who has a long history of representing players from the school.

If it's unlikely better enforcement is going to solve the problem, then the other alternative is to reform the NCAA's system. As I indicated above, the system itself isn't going to undergo a massive change. The most realistic thing you could hope for is a couple tweaks. One of those is FCOA, or Full Cost Of Attendance. As this report notes (big PDF, see p.8-9), athletic scholarships used to cover FCOA but since the early 1970's have covered less than that. There have been proposals lately that schools should cover FCOA; most of the big football schools are on board, while many smaller schools are not. Naturally, some of the details could be messy, and like many other regulations this one benefits the bigger schools with more resources. Frankly, though, I don't care; this is as much a moral issue as a practical one, and while my sister, a full-scholarship athlete at a school then a member of the Big XII, sometimes regaled me with tales of leftover per diem money, FCOA for all athletes should be the baseline.

Beyond FCOA, there's are certain other decisions that to me seem relatively obvious. As the Ed O'Bannon case winds its way through the court system, compensating athletes for revenues arising from their right of publicity may be something that ends up legally required. Compensating players for jersey sales seems like a slightly harder issue; I can order any NFL player's jersey, if only online (I own a Titans #71 Michael Roos jersey), but many schools sell only one or a selected number of player jerseys with that specific player's number on it. If a portion of that money goes to the player, does it all go to an individual player or does some or all of it go to individual team members. The NCAA could well decide to take the easy way out and stop selling jerseys with individual player numbers or names on them, thus obviating the argument that they're capitalizing on individual players' right of publicity (as the EA NCAA Football developer said in an interview I read, Florida QB #15 doesn't have to be exactly Tim Tebow the same way New England Patriots QB #12 has to be Tom Brady).

One of the reasons FCOA could be attractive based on Illegal Procedure is, once Luchs got smart about paying players, he tended to pay them $300-500 per month, nothing excessive but enough to give them a reasonable amount of spending money. FCOA theoretically gives the players that reasonable amount of spending money, thus obviating the need for extra money, right? It would probably have some marginal effect, but I bet that FCOA ends up being in effect an adjustment to the baseline; athletes are currently getting paid $500 a month in excess of the legal baseline, and after FCOA a number of them will probably still be making roughly that same $500 per month. Luchs realizes this, though, so he proposes essentially legalizing that payment.

What Luchs did when he paid players was write up documentation as though the payments were loans, to be repaid when players had money. His recommendation is to bring agent loans aboveboard by making them legal, giving public notice of them, and administering them in a way that gives the NCAA ability to supervise them. Before implementing this, the lawyer in me would want to do an analysis probably at least as long as this post to date; since this post is already at least twice as long as I thought it would be, I'll try to be brief:
  • A hypothetical NCAA-supported Compliance Department strikes me as the ideal party to oversee these loans. I'm surprised Luchs didn't make this suggestion in the book.
  • Repayment terms would have to be carefully crafted for agents to suffer from bad bets. Most personal loans, as these would be, are general recourse, to be repaid out of any monies owned by the borrower. If the intent is for loans to be repaid out of football earnings, I'd need to do more research on the enforceability and limits of loans whose only recourse is against a potential future income source, especially an unlienable one.
  • Beyond the recourse problem, repayment terms would have to be crafted taking into account a player's future football income. First-round draft picks would probably be required to pay off any modest loans quickly, while late-round players might be given a longer grace period or only have to pay off in part if they don't make the full roster. Of course, as Luchs talks about from his playing days, getting players to actually pay any agent is sometimes easier said than done.
  • Approving this would probably compromise, in the NCAA/schools' view, the NCAA's strong moral stance against paying college players, and don't you dare bring up football players playing minor league baseball for money.
  • One of the NCAA's concerns is their ability to control their own players, or at least limit agents' influence. This would essentially legitimize agents as market actors in the eyes of players. Right now already a number of players voluntarily forgo their remaining eligibility because of the market price cap, to their personal detriment. Increasing agents' access is likely to only increase that number. There are a number of good reasons you might be fine with this, and I'd probably agree with you, but you could easily argue it creates a worse equilibrium than the current situation. The best analogy I can think of is allowing high schoolers to bypass college and go directly to the NBA, which we know has been eliminated.
  • Players and people who want to pay them still could and would avoid the system. The people who paid Reggie Bush were marketing agents who wouldn't necessarily be subject to this system, not contract agents like Luchs. Boosters of School X who want to help players from School X also would bypass the system; Ohio State tat-gate and Nevin Shapiro would probably laugh at this system the same way agent Luchs laughed at the NFLPA people who tsk-tsk'ed him.
Of course, I don't have any magic bullet solutions either. Instead, the NCAA (which really means the member schools) will avoid compromising what it sees as its moral principles for as long as it possibly can, and the system will continue as much as it has been as possible, with the majority of players and people on the up-and-up or taking only relatively modest amounts of money from people like agent Luchs willing to go to the gray area and beyond.

And once again I've gone on for entirely too long, though not because I threw the book down eight or so times in anger like I did with Death to the BCS. I didn't throw down Illegal Procedure even once, speeding through most of it very eagerly. I just don't expect much change to the world of college sports, for good or for ill.

UPDATE (5/17/12, 2352 CT): Made a few stylistic and typo edits while resisting the urge to re-write some sections.

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