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Blog Entry

Some NFL agents already starting to panic

Posted on: March 25, 2011 5:13 pm
 

So this is the scenario happening now with dozens of younger NFL agents, if not a lot more, across the sport.

Some time ago, college player signs with agent. Transaction is legal.

Agent then pays for players' expenses including purchase of a car, payment of rent or mortage and monthly allowance of cash. All legal (if not offered as inducement) and has been done for years.

Agreement is that agent will receive these monies back once player is drafted and contract is signed with team (or thereabouts).

Except agent, because he or she is inexperienced, forgot to plan for something: the potential lockout.

Player and agent are basically using each other as line of credit until player made the NFL but it was the agent who was shelled out the money first expecting a return later.

So agent -- or should I say many agents -- are stuck with huge debts because of the lockout. Some in the agent community fear if the lockout extends into the summer there will be a legion of newer agents forced to declare bankruptcy and leave the business altogether.

Sure the agents should've planned better but they didn't and now here they are stuck in a potential financial mess. Make that, a likely financial mess.

Just like so many others.


Category: NFL
Tags: Labor
 
Comments

Since: Mar 1, 2007
Posted on: March 30, 2011 8:04 pm
 

Some NFL agents already starting to panic

Hawkman et al,
      
;     &nbs
p;     &nb
sp;    Sorry, my correction. The Bush Tax cuts are extended, so the 40% federal tax over $379,150 annual income is on hold and the rate will remain at 35% for another year. Depending on which state you live in, there is an additional tax of 4.54% (Arizona) to 11% (Hawaii and Oregon). It averages out to about 7%-8% on top of the federal tax across the nation. Crazy taxes. I thought it was bad here in Canada (which it is).

  So, next year, if you are Hawaiian or an Oregonaut/ Oregonian (???) and you make over $379,150 in taxable income, you will pay 50.6%. Others in other states will range from 44.54% to 48.6%. Tax shelter or no tax shelter, you eventually get hit with it. This does not include any property tax, school tax, sales tax, etc, but those are for a different conversation. Either way, you are right, it is not 50%, but it's awfully close.



Since: Mar 1, 2007
Posted on: March 30, 2011 3:46 pm
 

Some NFL agents already starting to panic

Hawkman et al,
      
;     &nbs
p;     &nb
sp;     You guys need to check some more things yourself. The 3% applies to salary only. It does not apply to guaranteed monies, signing bonuses, roster bonuses, playoff bonuses, etc. 20%-25% is what they are paying.

  As for tax shelters; they are only helpful to people who can resist the urge to spend all their money. Money in a personal corporation is one thing, getting it out is another. Anytime you spend money for personal benefits, you are going to pay personal tax on it. All the diamonds, Bentley's, and whatever else are not tax dedeuctible. So whatever they earn in their personal corporations can be sheltered from taxes so they pay as little as possible but once they start buying up millions of dollars of shyte, they pay tax. Also, tax shelters do not avoid taxation, they delay taxation. This is why so many athletes have IRS trouble a few years after they retire. This is not a secret.

  Corporate tax rates are much lower than personal tax rates, as you well know, but once money is spent personally, the tax rates go way up depending on your income. Federal tax is roughly 27% at $60,000 per year. As you hit higher tax brackets, that goes up. By the time you are making $1 million plus, you are getting into the 50% tax bracket (unless you keep it sheltered as you mention, but that only delays the inevitable).




Since: Nov 12, 2006
Posted on: March 29, 2011 4:06 pm
 

Some NFL agents already starting to panic

Of course it can be argued why do all these college graduates from these prestigious universities
How many are graduates?  How many of these universities are "prestigious" academically?

Most importantly though - guys who think like this make a lot of money for other people.  Imagine defending yourself in court.  You can conceivably do it, but the odds of you winning are astronomically against you.  Because you don't know what you're doing.  Just like contract negotiation.  When you don't know what you're doing, you'll likely come up far short of what you want.  What's the first thing smart people do when the IRS comes knocking, they receive notice of suit, or a subpoena?  They hire someone who knows what they're doing and don't pretend that because they graduated from a prestigious university they have an actual clue about the specific action they're faced with.



Since: Nov 12, 2006
Posted on: March 29, 2011 4:01 pm
 

Some NFL agents already starting to panic

Great summary! If agents weren't out there taking 20%-25% of a players income, we wouldn't have as mush squabbling about money.
Yeah....not so much.  As others have stated, the NFLPA limits the payment to 3% for contract-related negotiation services.  So the $2.5M you talk about will cost him $75K.  That's a weekend in Vegas.  Also, if you know anyone dumb enough to pay 50% tax on that income you know some really dumb people.  Any competent financial advisor is going to have enough tax shelters set up that, while they pay a lot of tax, it won't be near 50%.

Incidentally, the NBA caps agent compensation at 4% for similar services.  There's no cap on MLB agent compensation. 



Since: Sep 15, 2010
Posted on: March 29, 2011 12:49 pm
 

Some NFL agents already starting to panic

these are the same guys that help the players that have never played a down ask for a boat load of money only to have them squander it and leave the party early due to lack of discipline and work effort.  Now we should feel sorry for them because they can be out of a job soon if the lock out continues....hmm, well working hard to see why we need to feel sorry for them, cause they are part of the problem and if the players are smart they will get that in writing that these rookies will not come in any more expecting huge signing bonuses and then not producing....good luck guys, better start playing the middle to get both sides on the same page before your funds run out...lol



Since: Apr 27, 2008
Posted on: March 28, 2011 9:20 am
 

Some NFL agents already starting to panic

Finally, some good news out of this whole lockout mess.  It almost makes me hope it does continue until August.



Since: Apr 27, 2008
Posted on: March 28, 2011 7:24 am
 

Some NFL agents already starting to panic

But when a guy makes $1,500,000, pays 50% in tax and 20% to an agent, he's not bringing in a lot of money.
I believe(and I could be wrong) that according to the CBA..and Agent's percentage in the NFL is like 3% and nowhere near 20%?



Since: Apr 8, 2009
Posted on: March 26, 2011 10:58 pm
 

Some NFL agents already starting to panic

I do imagine that there will be zero sympathy for any agent who is going out of business.  Of course it can be argued why do all these college graduates from these prestigious universities need an agent to read a document for them in the first place? 



Since: May 4, 2007
Posted on: March 26, 2011 12:13 pm
 

Some NFL agents already starting to panic

boo-hoo for the agents - they are partly to blame for the whole problem of salaries in the NFL...
their putting out money and having it at risk is part of business...
if they didn't plan better then shame on them...
maybe they should whine to the federal government and they could get bailout money....



Since: Feb 11, 2008
Posted on: March 25, 2011 11:02 pm
 

Some NFL agents already starting to panic

Come on buddy...please check your facts...Agents per NFLPA regulation CANNOT take more than 3% of players salary as compensation.Some agents can make upwards if 20% on revenue from marketing contracts, but no more than 3% of player salary.
These are facts. Please stop spouting garbage on the web.


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