Show Me the Money:Four Key Streams of RevenueFor Professional AthletesGuest Post By Jaia A. Thomas, Esq.

Are you a professional athlete?  Do you work with one?  In her guest post below, sports and entertainment attorney Jaia A. Thomas shares with you her expert knowledge about how pro-athletes earn contingent and guaranteed compensation.  Need help maximizing these revenue streams?  Contact Jaia!

Jaia A. Thomas, Esq.

SHOW ME THE MONEY:

FOUR KEY STREAMS OF REVENUE FOR PROFESSIONAL ATHLETES

1).        SALARY - The bulk of a professional athlete’s income is generated from the salary provided for by their team. The salary structure in professional sports varies depending on the league. However, the salary structures in MLB, NBA and NHL contracts are similar in the sense that they provide guaranteed revenue. The salary structure in an NFL contract, on the other hand, does not provide guaranteed revenue, meaning the players who are cut are not eligible to receive their salary from the team. It is worth noting that the NFL does, however, offer players the opportunity to receive additional income through various conditional and non-conditional bonuses:

• Signing Bonus - This is a non-conditional bonus, paid once the player signs his contract.

• Roster Bonus - This is a conditional bonus, paid only if a player is still on the active roster of the team at a specific date.

• Workout Bonus - This is a conditional bonus, paid only if a player works out at the team facilities during the off-season.

2).        ENDORSEMENTS - From sneakers to credit cards to home insurance, there are very few products and services professional athletes haven’t endorsed. Lebron James currently receives over $40 million in endorsement income from Nike, Coca-Cola, Samsung and McDonalds. Professional athletes receive a considerable sum of revenue every year from endorsement deals. These deals usually vary in regards to performance related pay structures. However, payment is usually contingent not only on player performance on the field but also player performance off the field. All endorsement contracts contain a ‘morals clause,’ making payment contingent on an athlete’s ability not to act in a way that significantly devalues the endorsement or embarrasses the company. It is also worth noting that many companies are now offering stock, ownership rights and a percentage in company sales as opposed to traditional monetary compensation.

3).        EVENT EARNINGS/WINNINGS - In such sports as golf, tennis and boxing, where players are not employed by a specific team, they earn money through event earnings. However, even in those sports where players are employed by a team, players can earn additional revenue from event winnings. For instance, in 2012 the Patriots players earned an additional $62,000 each as part of the NFL’s playoff shares and even though they did not win the Super Bowl, they did receive an additional $44,000 for making a Super Bowl appearance (the Giants players received $88,000 each).

4).        APPEARANCE FEES - From Eric Berry (Kansas City Chiefs Defensive Back who charges $5,000 for an appearance or speaking engagement) to Robert Allen Dickey (Toronto Blue Jays Pitcher who charges $20,000 for an appearance), athletes frequently earn additional revenue and income from speaking engagements and appearances.

Jaia A. Thomas is a sports and entertainment attorney, focused on transactional and intellectual property matters. She is a graduate of Colgate University (BA) and The George Washington University Law School (JD). She also holds a Certificate in Television, Film and New Media Production from University of California, Los Angeles. She is the author of “Entertainment Law: The Law Student’s Guide to Pursuing a Career in Entertainment Law,” available via Amazon and Barnes & Noble. For more information: www.jathomaslaw.com or @jaiathomaslaw. 

A Well Kept Secret of Powerful Attorneys

Attention attorneys:

Are you regarded as one of the most powerful attorneys in your field? For example, did the Hollywood Reporter feature you in its 2010 Power Lawyers list?

If you answered “no,” consider a well-kept-secret from many of the Hollywood Reporter’s 2010 Power Lawyers:

What do so many powerful attorneys have in common? They know that:

1. It isn’t enough to know everything about intellectual property law, or the be a suave litigator

2. To be a power attorney, you must build a reputation of getting your clients a bigger piece of the pie

3. The most powerful attorneys seek the most help - getting lots of clients a bigger piece of the pie is not something you can do alone

To whom do powerful attorneys turn to gain leverage? The well-kept secret is a trusted auditor.

I know, since I am the auditor trusted by attorneys on many a “Power" list, including The Hollywood Reporter's:

However, few attorneys besides the upper echelon understand the power of knowledge that an auditor can provide. Those attorneys who appreciate the value of a compliance inspection typically have no idea that the decision to advise a client to audit rests squarely on their shoulders. (Often, if an attorney does not suggest an audit, nobody will - not even a business manager, unless the business manager happens to do audits... which presents a conflict of interest, incidentally.) Finally, when an attorney does realize that the decision to audit is largely hers, she may hesitate to advise a client to audit due to a fear of the unknown – unknown costs, unknown impact on business relationships and unknown recoveries.

This is why, if you represent someone who receives contingent compensation, it is crucial that you find at least one auditor you trust, who will:

· Help you figure out which cases require audits and which do not
· Advise you during negotiations of accounting clauses and definitions
· Take the stand and testify in the event of a royalty dispute that enters a litigation phase
· Perform due diligence and valuations of intellectual property
· Consult on bankruptcy and divorce cases that involve intellectual property
· Prepare royalty statements
· Conduct audits to:

o Recover your client's unpaid royalties or profits

o Ascertain compliance with marketing restrictions

o Identify breaches of contract

o Gain leverage for negotiation purposes

Building your team of experts now will give you the power to secure your clients royalty and profit entitlements and lay the foundation for your rise to powerful deal making and victories. Don't delay!