New York sports agent Norby Walters sat in front of his television set on April 28, 1987, watching the National Football League draft of college players, and his stomach was churning.
Six of the 28 players picked in the draft`s first round had at one time signed agreements with Walters that permitted him to negotiate their professional contracts.
But they had dumped him. Now, watching the draft unfold, Walters realized that he and his partner, Lloyd Bloom, had lost out on hundreds of thousands of dollars.
”I`m throwing up on my television,” the silver-haired Walters told reporters.
Each year, more than 1,000 sports agents descend upon hundreds of college football players in hopes of being chosen as the bargaining agents for athletes who are seeking a share of the millions of dollars paid out annually by the National Football League.
Norby Walters reached for-and almost grabbed-the brass ring. He eventually negotiated for two first-round picks-Temple`s Paul Palmer and Missouri`s John Clay, but the six others, unhappy with the deals they already had cut with Walters and Bloom, hired new agents. Some of those players subsequently told federal investigators they were threatened with physical harm for breaking those Walters-Bloom deals.
Instead of the instant wealth they had hoped for, Walters and Bloom became the targets of an 18-month federal grand jury investigation that last week resulted in charges that they had used the money and the muscle of organized crime to illegally secure agreements from college athletes for their New York firm, World Sports & Entertainment.
The indictment alleged an indifference by these two agents-reflecting perhaps on scores more-to collegiate as well as federal regulations in the agents` pursuit of the huge salary dollars in professional sports.
More ominously, some investigators fear, the charge that organized crime was involved financially raises the specter of possible tampering with athletes and the outcomes of sporting events.
Gambling of all types in this country, legal and otherwise, has been estimated to involve ”hundreds of billions of dollars” each year, according to President Reagan`s Commission on Organized Crime.
U.S. Atty. Anton Valukas, in announcing the indictment of Bloom and Walters last Wednesday, said ”it would be unfair” to suggest that the continuing investigation focused on point-shaving or game-fixing.
However, the allegation that Michael Franzese, a now-imprisoned top member of New York`s Colombo organized crime family, invested $50,000 in Walters` firm raises the possibility of mobsters infiltrating college and professional athletics. Franzese was named in the charges against the agents as an unindicted co-conspirator.
There is no evidence in the indictment that such infiltration exists, but the mere mention of Franzese`s name or any link to organized crime raises suspicion among law enforcement officials.
Furthermore, professional gamblers don`t need to absolutely ”fix” a game-ensuring a winner or a loser by seeing to it that someone will drop a pass or fumble a handoff. Gamblers would, and probably do, pay dearly for accurate information on the status of players, especially unreported injuries or other ailments likely to diminish the performance of a player.
FBI Agent Frank Storey told the organized crime commission at hearings in New York City in 1985 that gambling was the largest single source of mob income in the Northeast and generates half of all organized crime revenues. That translated to about $1.5 billion a year from numbers games and sports betting rings in the New York area alone.
The FBI, while reluctant to hang a dollar figure on the handle of illegal gambling, has acknowledged that some organized crime experts have put the sum at ”between $26 billion and $30 billion annually.”
”A substantial part” of that money, the commission reported in 1985, is controlled by organized crime families and is used to corrupt law officials as well as finance rackets.
In Chicago, profits from illegal sports and horse race wagering are clearly the mob`s No. 1 moneymaker, said Gary Shapiro, head of the Justice Department Strike Force on Organized Crime here. The FBI`s Chicago spokesman, Robert Long, said, ”It (gambling) is the prime moneymaker for the mob.”
Walters and Bloom have pleaded innocent to charges of racketeering, mail fraud and extortion. A trial tentatively has been scheduled for Feb. 27.
They are accused of showering cash, trips, hotel expenses and other gratuities on the players before their athletic eligibility had expired-a violation of National Collegiate Athletic Association rules.
”The athletes were wined and dined; taken to Beverly Hills, introduced to Prince and Whitney Houston, put up in hotels,” one sports agent said.
Indeed, the indictment charges that athletes were flown to New York, traveled in limousines and were given tickets to concerts where they were introduced to stars.
Walters and Bloom entered the sports agent business in 1984, apparently lured by the escalating salaries and signing bonuses dished out each year by the 28 professional football teams. In 1982, average pay was $90,000. By last year, it had reached $218,000, in no small measure due to the competitive forces generated by the fleeting existence of the now-defunct United States Football League.
Th potential lure of grabbing and representing first-round draft choices is underlined in financial data obtained from the National Football League Players Association that will be released soon in a quarterly newsletter.
First-round picks in the 1988 draft signed contracts with an average first-year salary of $480,000.
The players association certifies agents and sets maximum fees to be charged by agents for negotiating contracts. For example, under recently altered guidelines, an agent is allowed to charge players up to 5 percent of the contract amount above the minimum salaries set by the NFL`s union contract for the first three years of a player`s contract.
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Minimum salaries for the first three years are $50,000, $60,000 and $70,000. The fee guidelines thus mean that if a second year-contract is $260,000, an agent can take no more than 5 percent of $200,000, or $10,000. Most reputable agents take about 4 percent.
However, such rules have applied only to agents who represent veteran players, not to those representing college athletes bargaining their initial NFL contracts. Thus, they did not apply to Walters` and Bloom`s disputed deals. The union believes it now has the legal authority to close the loophole and will do so by extending its rules to all negotiations, effective Oct. 1.
A look at some of the deals players signed with Walters and Bloom reveals several possible motivations for switching to other agents. Some athletes signed for 6 percent and paid the commission on their entire package, even if some of the salary amounts were for later years and were not guaranteed. Perhaps more importantly, some gave up virtually all control of their financial future by granting Walters and Bloom powers of attorney over an extraordinarily wide range of activities, including the cashing of checks.
The union has something of a symbiotic relationship with agents, offering salary data to many in the hopes its members ultimately will benefit.
But even before the indictments, union officials were critical of the few contracts actually negotiated by Bloom and Walters.
They negotiated pacts for two first-round choices in 1987: Clay, an offensive tackle drafted 15th by the Los Angeles Raiders, and Palmer, a running back drafted 19th by Kansas City. Both agreements were sub-par, according to the union, when one takes into account where they were drafted in the first round and what comparable players received the previous year.
Indeed, the union attributes subsequent holdouts by several first-round choices, who were not Walters-Bloom clients, to those poorly bargained pacts. That`s because the Walters-Bloom deals were seen as prompting some teams to lower offers to their choices.
”Clay and Palmer simply had two of the worst first-round deals,” said M.J. Duberstein, director of research for the union, alluding to four-year contracts worth $1.3 million and $1.6 million, respectively.
For example, when Palmer signed with the Kansas City Chiefs, he was paid $450,000 on the spot as a signing bonus. Bloom and Walters received a commission of $78,000 on the entire $1.3 million, even though more than $400,000 of the money wouldn`t be paid for two or three years and only if Palmer made the team.
First-round draft picks that slipped through the hands of Walters and Bloom by securing new agents include Auburn University running back Brent Fullwood, who signed a $1.5 million three-year package with Green Bay;
Washington State defensive end Reggie Rogers, who signed a $1.8 million four- year contract with Detroit; and Purdue University defensive back Rod Woodson, who agreed to a nearly $1.9 million four-year pact with Pittsburgh.
A flat 6 percent of those three contracts, paid up front, would have generated $318,000 for Bloom and Walters. Once again, they would have skirted the union`s rules for agent`s fees, which allow an agent to only to take his percentage once the money is actually paid the player by the team.
”The good agent should get paid his percentage over the term of the contract, not up front,” said Steve Zucker, a Chicago sports agent who represents Chicago Bears quarterback Jim McMahon, who grosses more money in commercial endorsements than any other NFL player.
Zucker said, ”Usually a good hunk (of the money) will be in the signing bonus and the rest is in one-year contracts spread over three or four years.” More agents are lured to football, Zucker said, because about 150 to 200 new players are signed to professional football contracts annually, while there are only about 30 in basketball. Baseball players usually spend years in the minor leagues at a low salary before hitting the six-figure salary range. ”First-round (NFL) draft picks normally gravitate toward the better agents,” Zucker said. ”The first-round draft picks receive anywhere from several million for the first two or three (picks) down to about $2 million by the 10th pick, and about $1.2 million or $1.3 million for the rest of the first round.”
Zucker said the second-round picks generally get packages involving about $900,000 and third-round picks get about $800,000.
Ethan Lock, a professor of business at Arizona State University who helped negotiate a dozen NFL contracts this year, notes that while the lure of money is clear for prospective agents, the field is a difficult one to crack and the startup costs can be daunting.
There are perhaps 100 agents who represent 80 percent of the NFL players. But turnover is great-the average career in the NFL is just over 3 years-and only 4 percent of the players have contracts whose full duration are financially guaranteed.
An agent may sign a nice-sounding, four-year pact, but if a player gets cut or suffers a career-ending injury in the first year, it`s likely he won`t get a penny from the deal`s final three years. Bloom and Walters sought protection from that fate by getting their money up front, according to the contracts.
Getting clients can be exhausting and very expensive, mandating extensive travel and frequent attempts to curry favor with the college athlete and his family. Trying to curry favor with 10 athletes may result only in 1 or 2 coming into the agent`s fold. And unless a potential superstar is involved, the money is still not that great.
”It`s real expensive. That alone was enough to force me to say I don`t want to make that sort of financial commitment and expend that much energy,” said Lock, who represents Bears defensive back Mike Richardson by himself and serves as a consultant to Bruce Allen, a Phoenix agent and son of former NFL head coach George Allen.
Why do people become agents? Lock says it`s part money, part the perceived glamor of bigtime sports.
The union`s Duberstein says it`s 70 percent money, 30 percent glamor-and the glamor wears off quickly when one finds out that the players aren`t much different than anybody else, in some cases decidedly less intelligent and appealing.
Jack Childers of Talent Services Inc., Skokie, said negotiating contracts is the most lucrative branch of his business, which includes financial planning and outside business interests such as endorsements. Athletes sign separate contracts with Childers for financial planning and outside interests. Childers said he quit soliciting rookies because of the increased necessity of paying under the table.
Coaches liken the agent selection process to the recruiting of star high school athletes. In many cases, legitimate agents will contact coaches and family members first because they have the most influence with the athlete.
”It`s like the recruiting process all over again,” Boston College coach Jack Bicknell said. ”They sit down with the parents and try to sell them on their services. . . . There are some really good ones out there that are really looking out for the kids. . .
”It gets illegal when they start taking them out for dinner,” Bicknell said. ”I have no problem with them writing every day or calling them.”
Coaches said most schools tell athletes to avoid contact with agents until after their final college game, and most legitimate agents are willing to keep their distance.
Schools have taken some measures, though coaches concede not enough, to try to warn players against unscrupulous agents.
At the University of Washington, Huskie players listen to periodic lectures from alumni in pro football. ”The big message that our (former)
players are telling them is that they just don`t need an agent until they`re drafted,” coach Don James said.
Still, agents find ways to reach the Huskies ”in locker rooms, at away games, at the hotels,” James said.
And Charlie McClendon, who coached Louisiana State for 27 years, said it is almost impossible for coaches to shield their players from outsiders. ”We can`t be in every closet or with them every waking moment,” said McClendon, executive director of the American Football Coaches Association. ”There`s got to be some understanding of what`s right and wrong.”
Childers said he eventually became exasperated with the process and gave it up. ”We haven`t been on a college campus in two years,” he said. ”It`s obvious that no matter how good you are, you`re not going to get players if you don`t give them something. Walters and Bloom are the tip of the iceberg.”
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