The NCAA’s New Agent Rule and the MLB Draft

Historically, players selected straight out of high school in the Major League Baseball draft, or those drafted following their junior year in college, were forced to walk something of a fine line. Because the National Collegiate Athletic Association’s rules specified that any player who formally signed with an agent would lose his remaining college eligibility, draftees could not be directly represented by an agent when negotiating with an MLB team.

Instead, players could only employ an agent in an “advisory” capacity. Under NCAA rules, so long as a player’s “advisor” did not directly communicate with an MLB team on the player’s behalf, and so long as the player compensated the advisor for his services (at the advisor’s normal hourly rate), a player would maintain his college eligibility should he ultimately elect not to sign a professional contract and instead return to (or enroll in) college.

Of course, in practice this distinction between an “agent” and an “advisor” often turned out to merely be a matter of semantics. Teams routinely expected (and preferred) to communicate directly with a player’s agent, rather than the player himself, while recent draftees usually preferred to have their agent/advisor negotiate directly with an MLB team on their behalf. So despite their official title, advisors often served as players’ agents, directly representing their clients during their interactions with MLB teams, in violation of NCAA rules.

In most cases, the NCAA would turn a blind eye to this sort of circumvention of its rules. Unless the association was specifically notified that a player had been directly represented by an agent, it rarely investigated these cases on its own. And because a majority of draftees ultimately went on to sign professional contracts, most players weren’t particularly concerned about maintaining their collegiate eligibility anyway.

Recognizing the absurdity of this situation, the NCAA enacted a new rule this past January — bylaw — that allows some recent MLB draftees to formally hire an agent while still retaining their collegiate eligibility. So this week’s MLB Draft will mark the first time that some draftees have the option of officially hiring an agent without losing their remaining NCAA eligibility.

Specifically, the NCAA’s new bylaw creates an exception to the association’s traditional “no-agent” rule in the following circumstances:

In baseball, prior to full-time collegiate enrollment, an individual who is drafted by a professional baseball team may be represented by an agent or attorney during contract negotiations. The individual may not receive benefits (other than representation) from the agent or attorney and must pay the going rate for the representation. If the individual decides to not sign a contract with the professional team, the agreement for representation with the agent or attorney must be terminated prior to full-time collegiate enrollment.

In order to take advantage of the new bylaw, then, a player must be drafted straight out of high school — players drafted after their junior year of college are still not allowed to officially retain an agent without jeopardizing their remaining NCAA eligibility.

At the same time, those high-school draftees must not receive any benefits (such as free meals, equipment, etc.) from an agent outside of the representation he or she provides, and must reimburse the agent at his or her normal hourly rate for any services rendered. In addition, the player must officially terminate his relationship with the agent prior to enrolling in college.

Meanwhile, when initially passed, the new bylaw only applied to the NCAA’s “power five” conferences — the Atlantic Coast (ACC), Big 10, Big 12, Pacific 12, and the Southeastern Conferences (SEC) — having been enacted under their so-called “autonomy” power. (Back in 2014, the NCAA’s five largest conferences were given the freedom to enact their own rule changes without going through the normal, NCAA-wide approval process.) Because the new exception to the agent rule was passed through this autonomy process, all of the remaining NCAA Division I baseball conferences have the option of choosing whether to abide by the new bylaw or not.

I reached out to the other 26 Division I conferences to determine whether they were implementing the new rule as well. Of the 13 that responded, the overwhelming majority reported that they were allowing their member schools to follow the new regulation if they so desired. The only exceptions were the Ivy League (which was still reviewing the matter) and the Patriot League (which is planning to discuss the matter with its baseball coaches this fall).

So it appears that most high-school players drafted this year will — for the first time — have the option of hiring an agent to represent them without jeopardizing their collegiate eligibility.

That having been said, the overall impact of this new rule is likely to be rather modest. As an initial matter, players drafted after their junior year of college — a major subset of draftees — are omitted from the new bylaw. As a result, these players will continue to have to rely on the preexisting exception allowing them to merely consult with an “advisor” while negotiating with MLB teams.

At the same time, although the new bylaw does provide a new right for high-school draftees, it largely just serves to sanction the process that these players were already utilizing in spite of the NCAA’s prior rules. So in most cases, the new bylaw won’t actually increase the number of players represented by an agent, but will instead simply allow high-school draftees to be openly represented by an agent without fear of jeopardizing their future college eligibility.

That having been said, the ability to permissibly hire an agent without risking their collegiate eligibility does provide some potential benefit to high-school draft picks. In past years, the fact that a player was skirting the NCAA’s no-agent rule left him in a somewhat vulnerable position, as MLB teams could potentially threaten to report the player to the NCAA should he fail to sign a professional contract in order to gain some bargaining leverage.

While most teams historically resisted this urge, there have been a few notable exceptions over the years. Back in 2014, for instance, the Philadelphia Phillies came under fire for reporting their unsigned fifth-round draft pick, Ben Wetzler, to the NCAA after he was allegedly represented by an agent during his failed negotiations with the team. The Chicago White Sox reportedly did the same to A.J. Hinch back in 1992.

The new NCAA bylaw will hopefully reduce — albeit not entirely eliminate — these cases in the future.

Finally, it is also worth noting that enacting this new bylaw carries some legal risk for the NCAA. Back in 2009, an Ohio judge struck down the prior version of the NCAA’s no-agent rule, concluding that it unlawfully limited the scope of legal representation that players could receive from their attorneys. The case arose when the NCAA declared then-Oklahoma State pitcher Andy Oliver ineligible after learning that Oliver had been directly represented by an agent while negotiating with the Minnesota Twins after being drafted out of high school in 2006.

Oliver ultimately settled his case against the NCAA for $750,000, and as part of the settlement agreed that the Ohio judge’s decision in the lawsuit would be vacated, meaning that the NCAA would be allowed to continue to enforce its no-agent rule despite the fact that the court had ruled that it was unlawful. Nevertheless, the prior ruling suggested that the NCAA’s agent regulations were vulnerable to legal challenge should a future player decide to press the issue in court.

The new NCAA bylaw only strengthens that case. The fact that the NCAA is now openly allowing some MLB draftees to officially hire agents, while continuing to forbid college juniors from doing the same, only highlights the apparent unfairness of the existing rule. As a result, the NCAA’s no-agent rule remains ripe for legal challenge should the association elect to punish a player in the future for using an agent after being drafted following his junior year of college.

All in all, then, while the new NCAA bylaw is certainly a step in the right direction, its ultimate impact on the 2016 MLB Draft is likely to be rather limited.

Nathaniel Grow is an Associate Professor of Business Law and Ethics and the Yormark Family Director of the Sports Industry Workshop at Indiana University's Kelley School of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of Indiana University.

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Toffer Peak
7 years ago

This rule seems grossly unfair to poor players unable to afford an agent.

7 years ago
Reply to  Toffer Peak

True. Then again “grossly unfair” is really about the only thing the NCAA does well.