When Tom Cruise played a sleek 35 year-old sports agent19 years ago in the movie Jerry Maguire, society got a glimpse of the cutthroat nature of the sports agent business, and yet the dramatic emotional and psychological elements that go along with the industry. Today, the talent representation business within the sports industry is larger than ever, with such titans like the Creative Artists Agency (CAA) amassing upwards of $5 billion worth of contract dollars under management.
CAA is an example of an agency that started out in the entertainment industry and transitioned into the world of professional sports less than a decade ago. CAA has used its massive football division, specifically going after NFL quarterbacks to make the biggest splash in the sports agency world according to Forbes Magazine.
Behind CAA, Forbes ranks the industry’s newcomer, Relativity Media, as the world’s second largest sports agency, as they negotiate upwards of $2.5 billion in sports contracts. They represent over 300 athletes in the NFL, MLB and the NBA. Like so many sports agencies, Relativity Sports started out primarily as a film studio, where they would take acquire, develop and produce films and then turn them into television shows and distribute them. Relativity Media also engages in content creation across fashion, sports, digital and music, reaching consumers on multiple platforms.
Following behind CAA and Relativity, is the baseball mega agency, the Boras Foundation. Scott Boras, the single most successful sports agent in the industry’s history, founded the Boras Foundation. Some of Boras’ bigger name clients are Stephen Strasburg, Jacoby Ellsbury and Prince Fielder.
Octagon and Wasserman Media Group (WMG) round out the top 5 according to Forbes 2014 rankings. Octagon is the sports business arm of the publicly traded company, Interpublic Group of Companies, on the New York Stock Exchange. Octagon breaks down it’s sports business into two groups, Athletes and Personalities, and Marketing; with Athletes and Personalities are broken down into their respective sports, while Marketing primarily handles corporate sponsorship and events. Wasserman, meanwhile, manages over a $1 billion in NBA contracts alone, led by their super agent, Arn Tellem.
Forbes tallied these valuations in these rankings by the total contract value under management by the maximum agent commission for each sport: NFL (3%), NHL (4%), NBA (4%) and MLB (5%). Forbes chose to exclude sports like tennis and golf from these rankings due to the magnitude of variance of what athletes’ earnings in those sports are from year to year. Professional athletes do make additional money from endorsement and marketing deals. Forbes estimates that the average may make an additional 1-2% of their contract, where their agent(s) would generally just take home 25% of those endorsement and marketing dollars.
Sports agents, in general, do tend to get negatively stigmatized as sleazy salesmen who are more interested in their selfish financial gains rather than always acting in their clients best interests. Like any industry, there are certainly agencies and agents out there that may fit that stereotype, however the industry over the last decade or so has gotten more and more saturated. As industries, such as the sports agency field, tend to get overpopulated, the talent generally rises to the top. In today’s day and age, professional athletes have more opportunities than ever to capitalize on marketing and endorsement dollars through their unique likeness. Besides simply helping their clients negotiate contracts, agents are playing an ever-increasing role of maximizing their clients’ revenue generating capabilities.