Sports Attorney Steve Baker is an All Pro
By Jack Laufenberg, DOCKET- June 1994
Twenty-five years ago, when free agency was just a gleam in a young lawyer’s eye, all one really needed to be a sports agent was a working knowledge of the game and directions to the front office. Like most things, however, all that has changed.
“Representing a pro athlete takes a completely new set of skills,” said San Francisco-based sports attorney Stephen L. Baker. “Players today are making much, much more money and the legal rules are far more complex. As a result, an agent now has to be much more sophisticated in the business aspects of the sport. Today, it’s every bit as important to understand marketing, media relations, tax, contract and antitrust law as it is to understand how to calculate a batting average.”
Baker, who is married to KOVR Channel 13 morning and noon news anchor Claudia Cowan, has been a sports attorney for about eight years, although it didn’t start out that way. After graduating from Cornell Law School in 1983, he initially practiced corporate law in Los Angeles, doing litigation, trademark and other business-related work. After about three years, however, he began practicing with Leigh Steinberg, whom he had met at an event hosted by some sports and entertainment attorneys he knew.
Baker had always had an interest in sports and entertainment law, having grown up the son of a successful New York tax attorney who had spent his early legal career with the law firm that represented major league baseball, and who later represented such clients as Ed Sullivan and John Lennon. “I only understood years later why we were always able to get seats behind the Mets dugout,” Baker said. He also had done some television work on The Price Is Right and Family Feud during his first summer in law school. When he met Steinberg, it seemed like a natural fit.
In the 4 1/2 years he worked with Steinberg, Baker worked with some of the biggest names in sports, including Troy Aikman of the Dallas Cowboys and Warren Moon, then of the Houston Oilers. It is also where he met Cowan, who was anchoring for a television station in Monterey at the time and was looking for some advice. Fortunately for Baker, Cowan did not retain his firm and the two started dating about a year later. In 1991, Baker left Steinberg to open his own office and has been in solo practice ever since. He also began teaching at USF law school that year. His office shares space with a top San Francisco advertising agency whose clients include a number of sports businesses.
While most of his clients are professional athletes, Baker also represents several television and radio broadcasters. Some of his better-known football clients include Washington Redskins star outside linebacker Ken Harvey, for whom he negotiated a Redskin record $11 million deal, which included the second highest (after the Packers’ Reggie White) pay ($5 million in 1994) ever given to native Shante Carver, the Dallas Cowboys’ 1994 1rst-round draft choice.
According to Baker, there are four keys to “doing the deal” in professional sports: 1) understanding the finances and contract possibilities, 2) understanding the negotiator on the other side of the table, 3) understanding the sport, and 4) having a vision of the future. Of the four, Baker believes vision is often the most important element.
“It’s essential to have some degree of vision of what’s going to happen to the financial issues affecting the sport. As extraordinary as Magic Johnson’s 10-year $25 million contract was in the early 80′s, it was obsolete after two years. The NBA legal and salary structure is changing very rapidly. In the last few years we’ve seen the creation of major exceptions to the salary cap and a huge increase in league revenues. In the next few years, we’re likely to see increased international revenues and more exceptions to the salary cap. These changes will promote competition and help teams like the Sacramento Kings: with fewer restrictions they’ll have a better chance to improve quickly. This wasn’t the case ten years ago when the Celtics and Lakers dominated the NBA. ”
Baker bristles at the notion that free agency is ruining professional sports. ‘We are talking about the top 1 percent of the top 1 percent when we discuss athletes who can hope to be professionals.
Ken Harvey, and Shante Carver represent everything good about sports. They are fanatic competitors, positive role models, and active in their communities. That’s what we should read about on the sports page, not their salaries. I realize the salaries we read about in the paper look outrageous, but the athletes are the most important part of an extremely lucrative business. Moreover, for every superstar, there are hundreds of minor league ball players making about $ 1000 per month. The NFL was able to get a bigger television deal because they were able to leverage ABC against NBC and CBS against Fox,” Baker commented. “Professional sports teams can get sweetheart stadium deals because they can leverage cities against each other. Why shouldn’t the players have the same rights?”
With the growth of free agency, salary caps had a huge impact on sports. “Basketball and football ownerships have guaranteed themselves positive cash flow by committing a set percentage of their revenues to player salaries in exchange for a salary cap. No sports attorney likes salary caps, and we can certainly debate their equity endlessly. But they are a reality in football and basketball and a sports attorney must find creative ways to deal with them.” Baker said. ‘I believe a team will still go out and sign a top player for whatever it takes, since it can’t lose money due to the salary cap, but many mid-level players will suffer under such a system.”
Baker also envisions more corporate involvement and ownership in professional sports due to the enormous potential of cross-marketing, where the success of one product is used to help promote other products. Baker identifies Fox’s purchase of the rights to televise NFL games as a recent example of cross-marketing. Fox can never hope to recoup its costs through advertising revenue from the games themselves, but the increased exposure win increase the audience (and hence ad revenue) for other Fox programs.
Sports ownership offers you a recognition that very few activities can give you,” Baker said. “To the extent that it creates a positive public image, you can use that to promote some of the other things that you do. If you’re Blockbuster Video, and you’re spending millions a year in promotion, why not control the team?”
Corporate ownership and cross-marketing in the age of salary caps will pose their own unique problems to players and agents, Bakers adds, since salary caps are based on management’s argument that limits are needed on players’ salaries to prevent owners form bankrupting franchises in order to win. The players, on the other hand, believe the free market should be allowed to operate. Salary caps represent a compromise in which the players have a guaranteed percentage of the team’s profits in exchange for allowing owners to cap labor costs. With cross-marketing, the profits may show up in the related businesses but not in the team’s books resulting in an artificially low salary cap. “if you’re a professional team, and you own the stadium and all the businesses around the stadium, you’re making money on ail those businesses,” Baker said. “To the extent you do that as a result of the players, the salary cap becomes even more inequitable, since it is no longer reflective of the actual profits the players are generating. This could be the next big issue we face.”
Jack Laufenberg is a solo general practitioner in Sacramento.