Published May 14, 2018
Big Red Business: Little-known Nebraska law regulates sports agents
Steve Rosen  •  InsideNebraska
HuskerOnline.com

Scott Boras is one of the most powerful and successful sports agents in the world, with a blue-chip roster of clients and a business empire that includes marketing, sports training, and financial advice.

That’s not Dan Augustyns’ world, at least not now. The Lincoln attorney is a relative newcomer as a sports agent, with four active clients, including two former Nebraska football players. But he’s still looking for a big breakthrough.

“My goal is to build this practice and to be a long-term success,” Augustyn said in an interview.

While Augustyn and Boras operate in vastly different universes, both must comply with a little-known law enacted nine years ago called the Nebraska Uniform Athlete Agents Act. The act, among other things, requires agents to register with the Secretary of State’s office and prohibits them from improper inducements and contacts with college athletes.

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25 sports agents are licensed to do business in Nebraska, according to records; maintained by the Secretary of State’s office. Other agents on the list include Jason Rosenhaus, who runs Rosenhaus Sports Representation with his better-known brother, Drew, and Muhammad Abdullah, who represents his brother and former Nebraska star running back Ameer Abdullah, now with the Detroit Lions.

The recent federal fraud and bribery scandals that have scorched college basketball have shed more light on the vast and sometimes murky under-the-table deal-making involving unscrupulous sports agents and college and high school athletes.

Contrary to what you might think given all the clandestine meeting and dirty money exchanging hands, there are plenty of rules and regulations imposed on the sports agents business. But while the FBI used its immense investigative powers to come down on college basketball abuses, there are few examples of agents being prosecuted or suspended for bad business practices or misrepresentations.

Nebraska’s primary regulatory tool is the agent act, making it one of at least 40 states with similar laws designed to regulate sports agents’ conduct. The law has two enforcement provisions: Criminal penalties in the form of a Class 1 misdemeanor that can result in up to a year in jail; and civil actions with a maximum $25,000 fine.

Since the Nebraska Uniform Athlete Agents Act took effect in January 2010, there have not been any enforcement actions, according to David Wilson Jr., licensing director and associate general counsel for the Secretary of State’s office.

The regulatory checks and balances don’t stop there. The Federal Trade Commission investigates false inducements by agents. The NCAA has its own terms of engagement on what agents can and cannot do, and college athletic departments, including Nebraska, have their own compliance rules. Moreover, Augustyn and other lawyers also must adhere to standards of their state bar association, or risk losing their license.

In additions, some professional sports leagues and organizations, including the National Football League Players Association, have their own agent licensing standards.

Yet, it ’s a regulatory hodge-podge that some argue can and is being circumvented by the bad apples who are attracted by all the money to be made in sports.

"Not about flash"

Dan Augustyn is the only homegrown sports agent registered under Nebraska’s Uniform Athlete Agents Act.

The 41-year-old, seventh-generation Nebraskan officially became a licensed sports agent in fall 2016 to broaden his practice beyond personal injury law. It’s the only state he’s registered to do sports business.

“We aren’t about flash,” states Augustyns’ website “We are about helping players realize their NFL dreams. If you want promises that are just talk, we are not the guys for you.”

Augustyn’s focus is football, meaning he had to pay a non-refundable $2,500 application fee with the NFL Player’s Association, attend a two-day seminar and pass a test to become certified by the organization and represent players.

In addition, Augustyn has to pay the association $1,500 annually -- more if he has more than 10 clients with contracts -- plus $1,400 for insurance through the player’s association. He also has to attend at least one, one-day seminar.

Since hanging his sports shingle, Augustyn has signed five former college players: tight end Tre Foster and offensive lineman Corey Whitaker from Nebraska, Mike Miller, an offensive lineman from Washburn University in Topeka, and Pierre Gee-Tucker, a linebacker from North Dakota State. The fifth player, Mike Hill of Graceland in Iowa, is no longer working with Augustyn.

While all four current clients hope to get a shot in the National Football League, none has made a roster despite Augustyn’s best efforts to generate contacts and tryouts.

“I’m exploring avenues to figure out what’s best for them,” Augustyn said. Gee-Tucker and Miller, for example, are playing Your Call Football, which Augustyn describes as “Madden football with real life plays.” Even better, he said, players get paid decent money. (Though not represented by Augustyn, former Huskers Tommy Armstrong Jr. and Michael Rose-Ivey also play Your Call.)

Staying in the game, Augustyn said, improves the players’ chances of being spotted by a scout.

It also improves Augustyns’ odds of staying in compliance with the NFL Player’s Association, which requires an agent to place at least one player on an NFL 90-man roster every three years. Failure to do so severs the agent’s credentials with the association, not an insignificant action.

Until one of Augustyns’ clients make the NFL, he said, he’s not collecting any fees.

Cultivating contacts 

Whether your last name is Boras, Rosenhaus, or Augustyn, the sports agent business is all about cultivating contacts. That’s where Augustyn hopes his Nebraska ties and football focus will help.

He played high school football at Kearney Catholic and Lincoln Pius X, and said he once put a solid lick on a high school opponent named Scott Frost from Wood River. Augustyn earned his undergraduate degree from UNL in 1999, and his law degree from the University of Minnesota.

Augustyn comes from a football family; a grandfather had a tryout with the Green Bay Packers, and a cousin, Joe Augustyn, played tight end in the 1980s under Tom Osborne.

In his own way, Augustyn believes he can help restore the glory to Nebraska football. “The more guys I can land in the NFL, the easier it is (for coaches) to recruit players. I want to help the Huskers.”

Of course, that works both ways. The more talent at Nebraska means a potentially deeper pool of future clients for Augustyn.

The state's role

University of Nebraska law professor Jo Potuto is very familiar with the state’s agent registration act.

She served as an adviser to an organization that helped craft the national standards that states then adopted with their own statutes and legislation. The legislation defines what it is to be a sports agent, requires agents to register to do business in a particular state, and sets penalties for violations.

To register in Nebraska, an agent must pay an initial $300 fee, which is good for two years. The state charges $150 to renew registration.

According to the act, a sports agent is defined as “an individual who enters into an agency contract with a student-athlete or directly or indirectly, recruits or solicits a student-athlete to enter into an agency contract. The terms include an individual who represents to the public that the individual is an athlete agent.”

The definition does not include “a spouse, parent, sibling, grandparent, or guardian of the student-athlete or an individual acting solely on behalf of a professional sports team or professional sports organization.”

The athlete agents legislation, in its own words, is “designed to protect the interests of student-athletes and high school and college athletic departments.”

Under the Nebraska act, the secretary of state “may refuse to issue a certificate of registration or may suspend, revoke or refuse to renew a registration if it is determined that the applicant has engaged in conduct that has a significant adverse effect on the applicant’s fitness to act as an athlete agent.”

Looking back, Potuto said, “I thought at the time this was the wrong way to go...the reputable agents will operate under the law and register and the ones operating under the table won’t.” She said the statutes have more or less created a “black market” for unscrupulous agents to contact players.

She said there are some jurisdictional issues with the law. For example, Potuto said, if an agent based in California makes contact while a player is in the state for a game “then (Nebraska’s) registration statute doesn’t do much” to provide protection.

“The statute is not well matched to the behavior” of an agent, she said. “People do business all over.”

What would she like to see?

“I think the better way to go would be for a state to create a cause of action -- a tort -- for tampering with a student-athlete in a way that jeopardizes his or her collegiate eligibility,” Potuno said. “Those injured would be the student-athlete and university. That would not require an agent to register as doing business in a state.”

The end result, she added, is that this approach would permit a lawsuit to be brought against an agent wherever he or she is located.

Athletic department compliance 

Nebraska’s athletic department requires agents to be registered with its office in addition to the state registration.

“We make sure they are in good standing with the state and are properly registered with the appropriate governing agency,” such as the NFL Player’s Association, said Jamie Vaughn, senior associate athletic director for compliance. “We also ask that they communicate with our office if they plan to engage our student athletes.”

Vaughn said Nebraska has had a long-standing policy of prohibiting agents from attending practices and the school’s annual Pro Day event. “We do not host an Agent Day like some schools or like some states require,” including Texas, he said.

Vaughn said the athletic department also prohibits agents -- and their associates and go-between runners -- from receiving complimentary admissions from student-athletes to attend Nebraska games.

Expanding the definitions 

The investigation into alleged abuses in college basketball has generated fresh debate on whether federal laws should be toughened to bring dirty sports agents to justice.

But some legal experts believe there is still a role for states.

Some state legislatures have responded to the FBI probe of college basketball by exploring ways to toughen current licensing standards for agents.

In Missouri, for example, a bill introduced recently in the General Assembly seeks to expand the legal definition of a sports agent, increase agents’ responsibilities to notify universities of relationships with student-athletes, and raise the penalty for acting unscrupulously.

Missouri State Sen. Caleb Rowden initiated the legislative push to change agency law. The bill would expand the legal definition of a sports agent beyond an individual who enters into a contract with a student-athlete or recruits an athlete t enter into a contract.

Rowden’s proposed changes, according to The Kansas City Star, means an agent could also be someone who -- for compensation or in anticipation of compensation -- advises student-athletes on matters of finance, business and career management, as well as someone who “provides assistance with bills, payments, contracts, or taxes.”

“We run into people that tell us ‘I’m not an agent,’ but you’re stilling trying to make money off the athletic reputation of a student,” Bob Nolte, an assistant director of compliance for Missouri’s athletic department told The Star.

Potuto said all the financial pressures facing collegiate sports, such as paying athletes and sharing merchandising revenue, may require states to expand their definitions of what’s permissible and what’s not.

“The more you put in above ground, the more agents will conduct business appropriately,” she said.

A legislative spokesman for state Sen. Laura Ebke, of Crete, who chaired the state judicial committee in the last session of the legislature, said he was not aware of any pending bills seeking to toughen Nebraska’s Uniform Athlete Agents Act.

However, a bill passed this year, known as L.B. 299, creates a systematic process to review licensing procedures of certain occupations every five years. Those occupations include barbers, real estate agents, and sports agents. The law takes effect in July 2019.

Steve Rosen covers the business of sports for HuskerOnline.com. Questions, comments, story ideas? Reach Steve at sbrosen1030@gmail.com.