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2001 SESSION

016254804
HOUSE BILL NO. 2804
Offered January 19, 2001
A BILL to amend the Code of Virginia by adding in Title 54.1 a chapter numbered 5.2, consisting of sections numbered 54.1-526 through 54.1-533, providing for the regulation of athlete agents; penalty.
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Patrons-- Jones, J.C. and McEachin
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Referred to Committee on General Laws
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Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding in Title 54.1 a chapter numbered 5.2, consisting of sections numbered 54.1-526 through 54.1-533, as follows:

CHAPTER 5.2.
ATHLETE AGENTS.

§ 54.1-526. Definitions; treatment of certain personal service contracts.

A. As used in this chapter, unless the context requires otherwise:

"Agent contract" means any contract or agreement under which an athlete authorizes an athlete agent to negotiate or solicit on behalf of the athlete with one or more professional sports teams for the employment of the athlete by one or more professional sports teams.

"Amateur athlete” means an athlete who has never been compensated for his athletic services or signed a professional contract.

"Athlete agent” means a person who, directly or indirectly, recruits or solicits an athlete to enter into an agent contract or professional sport services contract with that person, or who for a fee procures, offers, promises or attempts to obtain employment for an athlete with a professional sports team.

"Director” means the Director of the Department of Professional and Occupational Regulation.

B. For purposes of this chapter, execution by an athlete of a personal service contract with the owner or prospective owner of a professional sports team for the purpose of future athletic services is equivalent to employment with a professional sports team.

§ 54.1-527. Licensure of agents.

A. Unless an athlete agent is licensed by the Director of the Department of Professional and Occupational Regulation as provided in subsection C, an athlete agent shall not contact, directly or indirectly, an amateur athlete while the athlete is located in the Commonwealth, where the purpose of the contract is to recruit or solicit the athlete to enter into an agent contract or professional sports services contract, or to procure, offer, promise or attempt to obtain employment for the athlete with a professional sports team.

B. A licensed athlete agent may make those contacts referenced in subsection A only in accordance with this chapter.

C. A written application for licensure or renewal shall be submitted by the athlete agent to the Director, on a form prescribed by him, stating:

1. The name of the applicant and the address of the applicant's principal place of business;

2. The business or occupation engaged in by the applicant for the five years immediately preceding the date of application;

3. The applicant’s formal training, practical experience and educational background in the subjects of contracts, contract negotiation, complaint resolution, arbitration or civil resolution of contract disputes, federal income taxation and federal estate planning;

4. The names and addresses of all athletes for whom the athlete agent is currently performing professional services;

5. The names and addresses of all athletes for whom the athlete agent has previously performed professional services, accompanied by a brief explanation of the reason the athlete agent is not currently performing professional services for the athletes; and

6. The names and addresses of all persons, except bona fide employees on state salaries, who are financially interested as partners, associates or profit sharers in the operation of the business of the athlete agent.

D. The license is valid for one year from the date of the initial licensure. The license shall be renewed annually by the filing of an application on a form prescribed by the Director and a renewal bond.

E. Fees for licensure and renewal shall be established by the Director pursuant to § 54.1-113.

F. An athlete agent must deposit with the Director, before the issuance or renewal of a license a surety bond in the sum of $100,000. The bond shall be in a form prescribed by the Director and shall be with a surety company authorized to do business in the Commonwealth. Any applicant may provide to the Director proof of an equivalent amount of professional liability insurance in lieu of a surety bond, provided that such professional liability insurance shall be of such type as to provide coverage for the same types of conduct, acts, or activities as are covered by the bond otherwise provided for in this section. The surety bonds shall be payable to the Commonwealth and shall be conditioned that the person applying for the license will comply with this chapter, will pay all amounts due any individual or group of individuals when the person or the person's representative or agent has received those amounts, and will pay all damages caused to any person by reason of the intentional misstatement, misrepresentation, fraud, deceit, or any unlawful or negligent acts or omissions, by the licensed athlete agent or the agent's representative or employee while acting within the scope of his employment.

This subsection shall not limit the recovery of damages to the amount of the surety bond or the professional liability insurance.

G. If a licensee fails to file a new bond or new proof of professional liability insurance with the Director before the expiration of the thirtieth day after the date of receipt of notice of cancellation by the surety of the bond or the issuer of the insurance, the license issued to the athlete agent under the bond or insurance shall be suspended until the time that a new surety bond or proof of insurance is filed.

H. The Director may suspend or revoke a license for a violation of this chapter or any regulation adopted pursuant to this chapter or may impose a monetary penalty not to exceed $1,000 for each violation, or may impose both such suspension or revocation and a monetary penalty. Any hearings held under this section shall be in accordance with the Administrative Process Act (§ 9-6.14:1 et seq.).

§ 54.1-528. Agent's contract; schedule of fees; maximum fee.

A. Any agent contract to be used by a licensed athlete agent with an amateur athlete who has never before signed a contract of employment with a professional sports team shall be on a form provided by the Director of the Department of Professional and Occupational Regulation.

B. The following provision shall be printed on the face of the agent contract in ten-point bold-faced type: "This athlete agent is licensed by the Director of the Department of Professional and Occupational Regulation of the Commonwealth of Virginia. Licensure does not imply approval or endorsement by the Director of the specific terms and conditions of this contract or the competence of the athlete agent."

C. A licensed athlete agent shall file with the Director a schedule of fees that the agent may charge to and collect from an amateur athlete who has never before signed a contract of employment with a professional sports team and shall file a description of the various professional services to be rendered in return for each fee. The athlete agent may impose charges only in accordance with the fee schedule. Increases in the fee schedule may be made from time to time, but an increase shall not become effective until the seventh day after the date a notice of an increase is filed with the Director.

D. If a multiyear professional sport services contract is negotiated by a licensed athlete agent for an amateur athlete who has never before signed a contract of employment with a professional sports team, the athlete agent may not collect, in any twelve-month period, for the services of the agent in negotiating the contract, a fee that exceeds the amount the athlete will receive under the contract in that twelve-month period.

E. A licensed athlete agent shall file with the Director a copy of an agent contract made with an amateur athlete who has never before signed a contract of employment with a professional sports team. If the amateur athlete is a student at an institution of higher education located in the Commonwealth, the athlete agent also shall file the contract with the athletic director of the institution. The contract shall be filed not later than the fifth day after the date the contract is signed by the athlete. An agent contract may be terminated by the athlete before the expiration of the tenth day after the date the contract has been filed as provided by this section.

§ 54.1-529. Prohibited activities.

No licensed athlete agent shall:

1. Sell, transfer, or give away any interest in or the right to participate in the profits of the athlete agent without the prior written consent of the Director;

2. Publish or cause to be published any false, fraudulent, or misleading information, representation, notice, or advertisement;

3. Advertise by means of cards, circulars, or signs, or in newspapers and other publications, or use letterheads, receipts, or blanks unless the advertisement, letterhead, receipt, or blank is printed and contains the registered name and address of the athlete agent;

4. Give any false information or make any false promises or representations concerning any employment to any person;

5. Divide fees with or receive compensation from a professional sports league or franchise, or its representative or employee unless the professional sports league has a uniform practice of paying athlete agent fees directly;

6. Enter into any agreement, written or oral, by which the athlete agent offers anything of value, including the rendition of free or reduced-price legal services, to any employee of an institution of higher education located in the Commonwealth in return for the referral of any clients by that employee;

7. Offer anything of value, excluding reasonable entertainment expenses and transportation expenses to and from the athlete agent’s registered principal place of business, to induce an amateur athlete who has never before signed a contract of employment with a professional sports team, to enter into an agreement, written or oral, by which the athlete agent will represent the athlete; or

8. Except as provided in § 54.1-530, contact, directly or indirectly, an amateur athlete to discuss the athlete agent’s representation of the athlete in the marketing of the athlete’s athletic ability or reputation or enter into any agreement, written or oral, by which the athlete agent will represent the athlete, until after completion of the athlete’s last intercollegiate contest including postseason games, and shall not, before that contest, enter an agreement that purports to take effect at a time after that contest is completed.

§ 54.1-530. On-campus agent interviews.

If an institution of higher education located in the Commonwealth elects to sponsor athlete agent interviews on its campus for its amateur athletes, a licensed agent may interview with the athlete to discuss the athlete agent’s representation of the athlete in the marketing of the athlete’s athletic ability or reputation. The athlete agent shall strictly adhere to the specific rules of each separate electing institution with regard to the time, place, and duration of the athlete agent interviews. The interviews shall be conducted during a period not to exceed ten consecutive days in each semester.

§ 54.1-531. Violations; penalties.

A. A licensed athlete agent who violates the provisions of subsection A or B of § 54.1-527 or the provisions of § 54.1-529 shall be subject to:

1. Forfeiture of any right of repayment of anything of value either received by an amateur athlete as an inducement to enter into any agent contract or received by an athlete before completion of the athlete’s last intercollegiate contest;

2. Payment of a refund of any consideration paid to the athlete agent on an athlete’s behalf; and

3. Payment of reasonable attorneys’ fees and court costs incurred by an athlete in suing an athlete agent for a violation of this chapter.

B. Any agent contract that is negotiated by an athlete agent who has failed to comply with this chapter shall be void.

C. An athlete agent commits an offense if the agent knowingly or intentionally violates the provisions of subsection A of § 54.1-527 or the provisions of § 54.1-529.

Any person violating the provisions of this subsection shall be guilty of a Class 1 misdemeanor.

§ 54.1-532. Records to be kept by athlete agent.

An athlete agent shall keep records approved by and filed annually with the Director. The records shall contain the name and address of each person employing the athlete agent, the amount of fee received from the person, and the specific services performed on behalf of the person.

§ 54.1-533. Implementing regulations.

The Director may adopt regulations necessary to carry out the provisions of this chapter.

2. That the provisions of this act shall become effective on January 1, 2002.