Making millions for NBA Stars: the high-powered world of super agents David Falk, Curtis Polk and Mike Higgins.
From the Print Edition:
James Woods, May/Jun 97
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Working with FAME has helped make Michael Jordan a tremendously wealthy man, and there are clear indications that the partners of FAME are also doing quite well. Agents typically receive 20 percent of the revenue from endorsements and other off-the-court deals. By some estimates, Jordan has amassed close to $200 million from Nike, Gatorade, Coca-Cola, cologne and cartoons. Two of Jordan's recent non-basketball ventures were sheperded by FAME: "Michael Jordan," the fragrance made by the Beverly Hills designer Bijan, was cited as the best marketed product of 1996 by the American Marketing Association, and Jordan's first cinematic turn came last fall with Space Jam, an animated joint venture between FAME and Warner Brothers.
Understand that in no way does Falk take Jordan for granted. Any NBA player can say goodbye to his agent by giving 15 days' notice. And, according to Falk, his "business marriage" with Jordan did not start out as a particularly close one.
"I think for the first four or five years he intentionally kept me at arm's length, watching, evaluating," Falk remembers. "I think things happened probably after the fourth year where I passed muster. I think that it's a measure of his intelligence that he wouldn't press a button and sign with somebody and say, 'OK, I trust you now because I've signed with you.' He wanted me to prove myself, and I think that's exactly the way it should be. You've got to stand the test of time." Now they are friends who compete to exchange, um, compliments.
"A lot of people don't like David, but he's the best at what he does," Jordan told USA Today last year. "What he does is get underneath your skin, whoever he's negotiating with, because he figures out what your objectives are, your angles. He understands the market; he understands the players. He's a brash, arrogant, egotistical, aggressive negotiator, which is good, because when you have someone represent you, you want him to do that. Marketing-wise, he's great. He's the one who came up with the concept of 'Air Jordan.' "
It is a measure of their closeness that Falk and Curtis Polk were among the few non-family members who gathered with Jordan after his father was murdered in North Carolina. It was soon after that the superstar had his stint in baseball's minor leagues. "Baseball is something Michael has always loved," Falk explains. "It was a challenge for him to play baseball and something that his father had encouraged him to do, actually after he won his first NBA championship. I thought it was terrific that someone who had accomplished everything that could possibly be accomplished in a career could take on a great new challenge to do something he truly loved."
The hiatus did little to diminish FAME's business or Jordan's stature as a celebrity. It might be argued that coming back to win a fourth NBA title may only have enhanced his appeal. If his salary as a player took a temporary dive, his endorsement income never skipped a beat.
Balls. FAME is really about balls. Lots of balls. Walking into the swank suite of offices in Washington's Chevy Chase Pavillion, one sees appliqués of footballs, baseballs and basketballs on the glass wall entrance. Real basketballs signed by FAME clients rest in glass cases shared with Wheaties boxes and huge basketball shoes endorsed by clients. Move back to Curtis Polk's office and there are jerseys from Patrick Ewing and Glen Rice in frames, alongside an animation cel from a Nike commercial. In Hollywood-hip, Curtis Polk is money, baby.
"Take Juwan Howard, for example," says Polk, who handled the second career contract of the Washington Bullets star, who turned out to be 1996's most sought-after and most embattled free agent. "The guy signs for $105 million and obviously he should be very set financially for the rest of his life based upon that. If you didn't do other aspects of work for him, you wouldn't have a lot to interact with him [about] over seven years.
"Where I think we really provide a lot of valuable services is in working with them after the contract and making sure that they don't go through their money, that they don't make bad investments, that they don't fall prey to people who are trying to take advantage of them, that we can insulate them from all the things that are going on around them."
This is the part of the business that fans and many reporters don't appreciate. Unlike a lot of agencies, FAME not only negotiates a player's contract, but also maintains a 25-person team of lawyers, financial planners, investment advisers, schedule makers, publicists and marketers. Financial planning and investment services are provided--for a minimum annual fee of $12,000--by a second company also named FAME, in this case "Financial Advisory Management Enterprises," which manages more than $130 million for about 18 clients.
It is a much-needed service in a world where players must concentrate almost solely on the game to succeed, but are confronted with a recruiting system that appeals to their sense of greed, while attracting parasites that show up as early as junior high school. As a result, many successful NBA candidates are ill-prepared to handle instant millionaire status and the microscopic attention and financial pitfalls that can come with it. As part of the service, Polk sits down with the players in a whirlwind accounting clinic and shows them on a spreadsheet where the money goes.
"Show him how much has to go to taxes. Forty-one percent, roughly, in federal taxes. State? Depends on where you live, but roughly 3 to 9 percent in state taxes. So it gets up to the high 40s, 50 percent. They pay us a few percent of the gross, union dues," Polk says. "Then I work with them on their expenses. Do they have a mortgage? Are they renting? Some of these guys have two places where they live, one in the city that they play in and another place, like their hometown where they grew up, [where they] live in the off-season. Maybe they're sending their parents some money every month. You know, they have certain expenses that are recurring every month, and we'll show them, after all is said and done, 'Here's what you have left.'"
Polk often draws up a budget for players and urges them to save because they will not be playing ball all their lives. The average length of service in the NBA is about five years. Polk says it's hard to tell anyone not to spend money, especially when you're talking about millions and the young player--more than half of the players in last year's draft were underclassmen--thinks that amount of money is going to last forever.
"The average person that we represent, if they can have 30 to 35 percent that they're saving, they're doing well," Polk estimates. "A guy at $100 million, I would hope that it's closer to 40 percent. If they spent a million dollars a year living, that's a great lifestyle. If half went to taxes and fees and whatnot, and they spent 10 percent, 40 percent's left. A guy saves $40 million of $100 million and he bought tax-free bonds and he got 5 percent." (In the beginning, players are generally risk-averse investors. ) "So, he's got two million a year coming in forever, but his $40 million's not gonna grow unless he saves some of that two million that comes in. That's one way to show a guy a very low-risk way of taking your money and using it to support a comfortable lifestyle for the next 30 or 40 years."
Most people hear about agents only when a player signs a one-year, $30 million contract or leaves a city to play for another team for more money. When that happens, agents typically get the blame. Sportswriters such as Tony Kornheiser of The Washington Post refer to them in such endearing terms as "Benedict Arnold," "bird of prey" and "imperious." Who needs that?
"If you spend a lot of your time worrying about the criticism and defending yourself, you're not going to be able to do what you're hired to do," Falk says. "I won't say I like the criticism. I don't think it's a compliment if someone says you have your own agenda, but I think at the end of the day, the people I worry most about are the people I work for, and I don't think too many of them think I have my own agenda. I don't think any of them feel it."
When Falk needs advice on handling bad press, he turns to his own clients--Jordan and Ewing. "You don't have to defend yourself," Jordan has said on more than one occasion, according to Falk. "Your record speaks for itself."
Michael Higgins recalls talking to an old friend who lit into him about the evils visited upon the sports world by agents: "He goes, 'God, you guys rape and pillage!' " Higgins' response was simple: "If Jim Carrey can get $20 million for The Cable Guy, Michael Jordan making $30 million a year is not a big deal."
"We're always the first villain," adds Polk, who points out that newspapers rarely dedicate daily coverage to movie salaries, but almost always have a sports page in which coverage of money matters is routine. "We didn't walk in with ski masks on and a gun in our hands and say, 'We gotta have this much money.' These guys have the power to say no."
Falk's position is closer to a life-affirming mantra: "Sports is entertainment. The age where people say sports is like entertainment is over. Sports is entertainment. It's billion-dollar entertainment."
Business wasn't always so good in the NBA. Go back fewer than 20 years and the league was moribund. "In the '80s the NBA was perceived as too drug-infested, too black, [with] failing franchises," recalls Armen Keteyian, a cigar smoking sports correspondent for ABC News and co-author with Martin F. Dardis and Harvey Araton of Money Players: Days and Nights Inside the New NBA (Pocket Books Hardcover, $23.95). "It was sort of looked upon as the weak stepsister of the NFL and just sort of didn't have any image. It was dying."
But since David Stern became commissioner in 1984, the 50-year-old NBA has seen unprecedented expansion and astronomical revenue growth. The income created by spinoffs is incalculable, but the NBA licensing alone produces at least $1 billion a year by most estimates. It is, to borrow a phrase from Dick Vitale, Awesome, Baby!
But with economic gain has come, according to Araton, the loss of a "certain sense of family."
"The league was essentially like a mom-and-pop run operation," recalls Araton, who writes a sports column for The New York Times. "It's just become so big and so successful that it's now more like a giant corporation. The main focus of the league is really to sell, sell and sell. It's kind of the Nike of sports leagues. You know, Nike is push-push, drive-drive, sell-sell. The NBA is kind of along the same track: Put a logo on it, throw a couple of celebrities in, play some rock music or rap music, and just kind of throw it out there and let it be consumed."
It's hard to argue with the prosperity that this financial and marketing juggernaut has wrought, but Araton maintains that the standards of success have been diminished. "Jordan is in a league by himself," Araton says. "The guys like [Golden State Warrior] Latrell Sprewell and [Washington Bullet] Chris Webber and [L.A. Laker] Shaquille O'Neal, they're all corporate-manufactured superstars and celebrities. They basically reap the benefits that the early guys set up for them. Most people agree that they really haven't done anything to earn it. I know that the guys like Jordan and Magic Johnson and Larry Bird feel, in effect, that [the young players] are fabricated stars."
FAME is unquestionably in step with this "market-the-stars" philosophy, but its role is much more personal. Keteyian, who in 1991 co-wrote, with Alexander Wolff, Raw Recruits, which revealed the darker side of college recruiting, contends that FAME does business aggressively but honestly. "From everything I can see," says Keteyian, "David uses every bit of leverage he can to get his athletes the very best deal."
Fighting for its clients has sometimes meant very public battles between FAME and the league, including last year's much-publicized fight over the NBA's collective bargaining agreement. The uglier, very personal characterizations of the battle had Stern as the scourge of players' rights and Falk as the personification of the self-serving agent. While many players spoke out, the assumption was that Falk was putting words in the mouths of three of the more prominent dissidents, Jordan, Ewing and Mourning.
"That was certainly Falk versus Stern," says Keteyian, "but in both of their minds it's just business. It's all business and it's big, big, big, big, big, big, big business. Nothing personal."
In the end, the players ratified a revised collective bargaining agreement that lessened the restrictions placed on them. Basketball Digest wrote, "Although he didn't prevent the agreement from being ratified by the league's players, Falk played a significant role in leveraging the owners to secure a better deal for the players than was initially offered."
Falk disputes the size of his role, pointing out that everyone at these very high levels has advisers. "Patrick [Ewing] really was the leader, but all three [Ewing, Jordan and Mourning] were very active. Everybody basically accused them of being my mouthpiece and yet nobody would say that David Stern had a lawyer. He had an army of lawyers," Falk says. "I'm not a Svengali, I can't hypnotize them and make them follow a certain party line, but certainly I'm going to do my best to advise them of what's in their best interest, whether it's popular or unpopular publicly. That's my job."
Players notice how well FAME performs.
"If there's one thing of which NBA players are cognizant, it's money," Keteyian sums up. "When they see Juwan Howard get $105 million to stay in Washington or they see Alonzo Mourning sign a huge deal, they know who did the deal."
During a midseason game between the Washington Bullets and the visiting Milwaukee Bucks, Michael Higgins is mildlyanguished by Washington's Calber Cheaney's form at the foul line. "What kind of shot is that?!" Higgins exclaims. "Ugly!" he answers himself, as the ball bounces off the rim. "You know, the coaches fool around with their shooting and they forget their natural form."
After the game, Higgins is on the opposite side of the USAir Arena exchanging hugs and kisses with Cheaney's family, fiancée and friends. He is waiting for Cheaney to emerge from the locker room, which only the Bullets place off limits to agents. Higgins wants to talk to Cheaney about how he is doing under the new Bullets coach, Bernie Bickerstaff. It's a quiet discussion near the stands and Cheaney is saying that things are going pretty well.
"You know, sometimes players don't play well with some teams, and when they go to another team, they just fit in better," Higgins says. "The same applies to coaches and their new teams, and the sports agents as well."
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