David Falk is an absolute legend in the agent industry. He's represented more No. 1 picks than any agent and he will always be known as the guy behind Michael Jordan.
I always call Jordan the father of modern day sports marketing, but the truth is that Falk really is--Jordan was just the vehicle. It was Falk that did all the deals from Nike (I'd estimate Jordan still makes something like $40 million annually off the brand) to Gatorade to McDonald's .
Falk recently donated $5 million to his alma mater, Syracuse University, to kickstart the school's sports management program and will have a book out next year called, "The Bald Truth," a business book that relates his experiences in the sports business world into general business lessons.
Darren: There are a lot of sports management schools out there, but it seems like this one with your name on it has a chance to stand out. Why did you do this?
Falk: When I worked at Proserv, the most I ever made in a single year I think was $230,000, even though I worked with stars like Michael Jordan, James Worthy and Boomer Esiason. When I went on my own in 1992, I thought I was wealthy. As the years went on, I started to think about this and I wanted to do this because to me it gives me a very tangible reward that in the end will be more of a human contribution than a financial contribution.
Darren: You’ve already been pretty adamant that the program at Syracuse will have no classes on how to become a sports agent. That seems a bit ironic, especially since so many kids are in sports management because of “Jerry Maguire.” What's your take on the current state of the agent industry?
Falk: There's a famous story about a bank robber. When they finally arrested him they said, "You're a smart guy, why do you rob banks?" And he said, "Well, that's where the money is." There are plenty of other areas in the sports business to go into. My message to kids is go into sports hospitality, go to the leagues and the teams, because the reality is that there aren't that many agent jobs out there. Aside from the IMG's and what used to be of SFX, most of these companies are very small. So it's faulty to get your degree in sports management with the idea of becoming an agent. You're just "niching" yourself into an already narrow market where its hard to make a living.
Darren: How hard is it to be an agent these days?
Falk: It's easier these days because the role of agents is being diminished every year as the leagues continue to pass rules that dramatically restrict what agents can do. In the NBA, they have the rookie scale and the max deals, so they are capping salaries on the front and back end so at every turn you lose your ability to be an entrepreneurial dealmaker. I'm not angry about it. It is what it is. But it just goes to show you the nature of the leagues and their relative strength against their unions.
Darren: You sold your agency, FAME, for $100 million in 1998 to SFX, but continued representing players. You then took a step back to oversee things, but now you're back in the game. What's the latest?
Falk: The whole idea of bringing it to a mega entertainment agency didn't work particularly well. I think the perceived synergies were more than what were actually realized. Today, we're clearly a boutique representing eight clients including Elton Brand, Mike Bibby, Jeff Green, Juwan Howard, Dikembe Mutombo, Sam Cassell, Patrick Ewing Jr. and John Lucas III. And I don't want to be what I was to my clients 10 or 15 years ago. I want to take what I've learned in the past 35 years and share my knowledge with these young players.
Darren: There's a reason that the business has a dirty reputation. What's your take on it?
Falk: Instead of evolving, the sports agent business has devolved. We're talking about reverse evolution. It's basically unregulated and there's wholesale cheating going on. I'm not angry about it. It's just that it's about buying clients instead of building relationships. When I think about telling Alonzo Mourning in 1995 to turn down a 13-year, $114 million offer, it was about believing in me. Then, the next year, he got a seven-year, $105 million deal. I told a client not to marry someone 48 hours before their wedding. You can't buy those relationships. So the people who buy athletes and the athletes that allow themselves to be bought are just cheating themselves. But there's been a total breakdown in the system and everyone knows it. I mean, if all of a sudden South Dakota State has the best recruiting class is college basketball people can think that the coach either did great homework or cheated. But most of the time they think he cheated. That's really what's going on here. I'm not bitter. I had my run. But we're dealing in a world where agents are splitting fees with AAU coaches all the time. And it's getting worse. I wanted to meet a college player who I really enjoyed watching this year. So I asked a friend of mine, who is a very powerful man in the game, to introduce me to him. And he said, "I'd like to help but I can't." And when I asked why. He said, "You are three years and $500,000 short."
Darren: How much are the players to blame in all of this?
Falk: They definitely play a part. I bumped into a player the other day and he said he was on his third agent in 10 years in the league. And this agent was calling him every day and I said to him, "Did you jump from high school into the league?" And he said, "Yeah." And I said, "You're 28 now. Why are you still acting like you're in high school? If you need someone to call you everyday you should have probably gone to college.
Update: If you're interested in the sports agent business, you might want to read Darren Heitner's blog and his recent interview with Leigh Steinberg.
Questions? Comments? SportsBiz@cnbc.com