Amendment ASA1-AB403

LRBs0362/1

MDK:cmh&wlj:PG

2003 - 2004 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 2003 ASSEMBLY BILL 403

February 17, 2004 - Offered by Joint Committee on Finance.

AB403-ASA1,1,5 An Act to amend 440.05 (intro.); and to create 440.08 (2) (a) 14d. and subchapter XII of chapter 440 [precedes 440.99] of the statutes; relating to: regulating athlete agents, providing an exemption from emergency rule procedures, granting rule-making authority, making an appropriation, and providing penalties.

Analysis by the Legislative Reference Bureau

This substitute amendment regulates athlete agents who represent student athletes by enacting the Uniform Athlete Agents Act, which was approved by the National Conference of Commissioners on Uniform State Laws in 2000. With certain exceptions, the substitute amendment defines an "athlete agent" as someone who does any of the following: 1) enters into an agency contract with a student athlete; 2) recruits or solicits a student athlete to enter into an agency contract; or 3) represents to the public that he or she is an athlete agent. An "agency contract" is defined as any of the following: 1) an agreement under which an athlete agent negotiates on behalf of a student athlete; 2) a professional-sports-services contract; or 3) an endorsement contract. A "student athlete" is defined as an individual who engages in, is eligible to engage in, or may be eligible in the future to engage in, any intercollegiate sport. However, if an individual is permanently ineligible to participate in a particular intercollegiate sport, the individual is not considered to be a student athlete for purposes of that sport.

The substitute amendment prohibits an individual from acting as an athlete agent unless he or she is registered with the Department of Regulation and Licensing (DRL). The following are excluded from the definition of "athlete agent" and do not have to register: 1) a spouse, parent, sibling, grandparent, or guardian of a student athlete; 2) an individual acting solely on behalf of a professional sports team or professional sports organization; or 3) an individual who provides information to a student athlete, but who does not recruit or solicit the student athlete to enter into an agency contract. Also, except for signing an agency contract, an individual may act as an athlete agent before being registered if a student athlete, or someone acting on behalf of the student athlete, initiates communication with the individual and he or she applies for registration within seven days after an initial act as an athlete agent. The substitute amendment provides that, if an unregistered athlete agent who is required to be registered enters into an agency contract with a student athlete, the contract is void and the athlete agent must return any consideration received under the contract.

An applicant for registration must describe the applicant's training, experience, and education and also identify his or her business associates. For a business that is not a corporation, the applicant must identify the partners, members, officers, managers, associates, or profit sharers of the business. For a corporation, the officers, directors, and shareholders with an interest of 5 percent or more must be identified. In addition, an applicant must describe all of the following: 1) any felony for which the applicant or a business associate has been convicted; 2) any administrative or judicial determination that the applicant or a business associate has made a false, misleading, deceptive, or fraudulent representation; 3) any instance in which the conduct of the applicant or a business associate has resulted in a sanction, suspension, or declaration of ineligibility to participate in an interscholastic or intercollegiate athletic event; and 4) any sanction, suspension, or disciplinary action taken against the applicant or a business associate arising out of occupational or professional misconduct.

An applicant must submit an application on a form prescribed by DRL. However if the applicant is registered or licensed as an athlete agent in another state, the applicant may, under certain circumstances, submit to DRL a copy of the application to the other state.

DRL must register an applicant as an athlete agent, unless DRL determines that the applicant has engaged in conduct that has a significant adverse effect on the applicant's fitness as an athlete agent. In making this determination, DRL may consider whether the applicant engaged in certain conduct, including the following: 1) conduct that would disqualify the applicant from serving in a fiduciary capacity; 2) conduct that significantly adversely reflects on the applicant's credibility, honesty, or integrity; or 3) conduct that violates prohibitions specified in the substitute amendment that are described below. An individual who is registered by DRL must apply to renew the registration every two years and pay a renewal fee. An applicant for renewal may, under certain circumstances, submit an application for renewal that was submitted to another state. DRL may suspend, revoke, or refuse to renew a registration for conduct that would have justified denial of the initial registration.

The substitute amendment imposes certain requirements on agency contracts between athlete agents and student athletes. An agency contract must contain specified provisions, including a notice to the student athlete that, by signing the contract, he or she may lose his or her eligibility to compete as a student athlete. The substitute amendment gives a student athlete the nonwaivable right to cancel an agency contract within 14 days after the contract is signed. In addition, a student athlete may void an agency contract that does not comply with the substitute amendment's requirements. Also, both the athlete agent and the student athlete must notify the student athlete's athletic director about an agency contract within 72 hours after execution of the contract or before the next scheduled athletic event in which the student athlete may participate, whichever occurs first.

The substitute amendment prohibits an athlete agent from engaging in the following conduct with the intent to induce a student athlete to enter into an agency contract: 1) making materially false promises or representations; or 2) furnishing anything of value to the student athlete or any other individual, including another athlete agent. The substitute amendment also prohibits an athlete agent from intentionally engaging in certain conduct, including the following: 1) initiating contact with a student athlete unless the athlete agent is registered under the substitute amendment; or 2) failing to notify a student athlete that signing an agency contract may make him or her ineligible to participate in a sport as a student athlete. In addition, the substitute amendment imposes record-keeping requirements on athlete agents.

An athlete agent who violates the substitute amendment's prohibitions may be fined $10,000 or imprisoned for not more than nine months or both. The substitute amendment also allows DRL to directly assess a forfeiture of not more than $25,000 for a violation of the substitute amendment. In addition, an educational institution may bring an action against an athlete agent or former student athlete for damages caused by a violation of the substitute amendment.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB403-ASA1, s. 1 Section 1. 440.05 (intro.) of the statutes is amended to read:

AB403-ASA1,3,4 440.05 Standard fees. (intro.) The following standard fees apply to all initial credentials, except as provided in ss. 440.42, 440.43, 440.44, 440.51, 440.9935, 444.03, 444.05, 444.11, 447.04 (2) (c) 2., 449.17, 449.18 and 459.46:

AB403-ASA1, s. 2 Section 2. 440.08 (2) (a) 14d. of the statutes is created to read:

AB403-ASA1,4,2 440.08 (2) (a) 14d. Athlete agent: July 1 of each even-numbered year; the amount specified in rules promulgated under s. 440.9935.

AB403-ASA1, s. 3 Section 3. Subchapter XII of chapter 440 [precedes 440.99] of the statutes is created to read:

AB403-ASA1,4,5 chapter 440

AB403-ASA1,4,6 subchapter xii

AB403-ASA1,4,7 Uniform athlete agents act

AB403-ASA1,4,8 440.99 Definitions. In this subchapter:

AB403-ASA1,4,11 (1) "Agency contract" means an agreement in which a student athlete authorizes a person to negotiate or solicit on behalf of the student athlete a professional-sports-services contract or an endorsement contract.

AB403-ASA1,4,20 (2) "Athlete agent" means an individual who enters into an agency contract with a student athlete or recruits or solicits a student athlete to enter into an agency contract. "Athlete agent" includes an individual who represents to the public that the individual is an athlete agent. "Athlete agent" 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. "Athlete agent" also does not include an individual who provides information to a student athlete, but who does not recruit or solicit the student athlete to enter into an agency contract.

AB403-ASA1,4,25 (3) "Athletic director" means an individual responsible for administering the overall athletic program of an educational institution or, if an educational institution has separately administered athletic programs for male students and female students, the athletic program for males or the athletic program for females, as appropriate.

AB403-ASA1,5,3 (4) "Contact" means a communication, direct or indirect, between an athlete agent and a student athlete, to recruit or solicit the student athlete to enter into an agency contract.

AB403-ASA1,5,7 (5) "Endorsement contract" means an agreement under which a student athlete is employed or receives consideration to use on behalf of the other party any value that the student athlete may have because of publicity, reputation, following, or fame obtained because of athletic ability or performance.

AB403-ASA1,5,10 (6) "Intercollegiate sport" means a sport played at the collegiate level for which eligibility requirements for participation by a student athlete are established by a national association for the promotion or regulation of collegiate athletics.

AB403-ASA1,5,13 (7) "Professional-sports-services contract" means an agreement under which an individual is employed, or agrees to render services, as a player on a professional sports team, with a professional sports organization, or as a professional athlete.

AB403-ASA1,5,15 (8) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

AB403-ASA1,5,17 (9) "Registration" means registration as an athlete agent under this subchapter.

AB403-ASA1,5,20 (10) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

AB403-ASA1,5,24 (11) "Student athlete" means an individual who engages in, is eligible to engage in, or may be eligible in the future to engage in, any intercollegiate sport. If an individual is permanently ineligible to participate in a particular intercollegiate sport, the individual is not a student athlete for purposes of that sport.

AB403-ASA1,6,4 440.9905 Service of process. By acting as an athlete agent in this state, a nonresident individual appoints the secretary of state as the individual's agent for service of process in any civil action in this state related to the individual's acting as an athlete agent in this state.

AB403-ASA1,6,8 440.991 Athlete agents: registration required; void contracts. (1) Except as otherwise provided in sub. (2), an individual may not act as an athlete agent in this state without holding a certificate of registration under s. 440.992 or 440.993.

AB403-ASA1,6,11 (2) Before being issued a certificate of registration, an individual may act as an athlete agent in this state for all purposes except signing an agency contract, if all of the following are satisfied:

AB403-ASA1,6,13 (a) A student athlete or another person acting on behalf of the student athlete initiates communication with the individual.

AB403-ASA1,6,16 (b) Within 7 days after an initial act as an athlete agent, such as an effort to recruit or solicit a student athlete to enter into an agency contract, the individual submits an application for registration as an athlete agent in this state.

AB403-ASA1,6,18 (3) An agency contract resulting from conduct in violation of this section is void and the athlete agent shall return any consideration received under the contract.

AB403-ASA1,6,24 440.9915 Registration as athlete agent; form; requirements. (1) An applicant for registration as an athlete agent shall submit an application for registration to the department in a form prescribed by the department. The application must be in the name of an individual and, except as otherwise provided in sub. (2), signed or otherwise authenticated by the applicant under penalty of perjury and state or contain all of the following:

AB403-ASA1,7,2 (a) The name of the applicant and the address of the applicant's principal place of business.

AB403-ASA1,7,3 (b) The name of the applicant's business or employer, if applicable.

AB403-ASA1,7,5 (c) Any business or occupation engaged in by the applicant for the 5 years next preceding the date of submission of the application.

AB403-ASA1,7,6 (d) A description of all of the following:

AB403-ASA1,7,7 1. The applicant's formal training as an athlete agent.

AB403-ASA1,7,8 2. The applicant's practical experience as an athlete agent.