You Got Served: Considering Jay-Z as a sports agent

Happy Thursday, friends.  Today, I want to get all thoughtful and contemplative, and consider a subject that’s creeping into NFL discussion, mostly with negative connotations.  I’d like to bring some balance to the discussion.

The subject du jour (which means “of the day,” for you Europhobes,) is Jay-Z’s move toward becoming a player agent.  Word is already out that DeSean Jackson has fired Drew Rosenhaus, and that he’s looking to get himself into the Roc Nation fold.

Jackson has a bit of a reputation as a me-first diva knucklehead WR, and race-baiting douchebag Mike Florio is being subtle at this point, but he already has his commenters frothing.  That’s generally been the tone of coverage of Jay-Z’s foray into agenthood.

When I was an early teenager, I decided that I wanted to be a sports agent.  My thought process was that I’m usually the smartest guy in the room, and that I like sports a lot.  It’s a natural fit, right?  

(EDIT 10:53 AM Arizona Time - I'm talking about what my thought process was at 14 there, quite obviously, so save the stupid comments, or I'll probably ban you, which I've done to only one (completely and consistently awful) person ever.  Don't try me today, though.)

Well, that was until my dad killed the dream for me.  He told me that only Jewish guys get to be sports agents, because people tended to believe the stereotypes about them being shrewd negotiators who are good with a buck.  He had a point, really, because in 1991 (and still today, but to a lesser degree) the industry was dominated by Jews.

Jay-Z is an interesting guy, because everything he touches tends to turn to gold.  He went from growing up in Brooklyn’s Marcy Projects to being well on his way to becoming a billionaire.  According to the site I just linked, if you add the net worths of Jay-Z and his wife Beyonce, you get $800 million.  I wouldn’t be surprised if the real number is higher than that.

It’s funny, because in America, we have a lot of people who love them some capitalism, but only insofar as the “right people” get rich.  The capitalism-lovers I’m talking about tend to be lower-class white people, who are not rich, and who never will be rich, but who vote to screw over their own economic interests, because they think that Mitt Romney, Rick Scott, and Dennis Kozlowski deserve to be wealthy, and that the protection of their wealth should be our first national priority.  God wants them to be rich; otherwise, why would they be?  Who are we to interfere with God’s plan by electing redistributionists?

When a black guy from the entertainment industry like Jay-Z gets rich, though, many of these same people act like it’s some kind of temporary mistake, like the homie Jesus is just taking a nap on it, or something.

That (pick your favorite slur for “black man”) doesn’t deserve all that money!  All he does is make that hippity-hop crap!  It’s not even music!  I go to work every day, and break my back, and I can’t get a raise, but this uppity son of a bitch gets millions of dollars for corrupting our children, and making them want to wear their pants sagging low!  Life isn’t fair!

And don’t even get these people started about how terrible it is that the President of the United States is a Jay-Z fan, and that they’re friends.  There’s another guy whose success is illegitimate, that Barack Obummer.

He's not even a real American!  God should strike Obummer dead, and set the world right.

Let me tell you about capitalism, friends.  In a capitalist society, the way that it’s supposed to work is that the customer rules.  S/he decides what s/he wants, and that’s represented by aggregate demand, which theoretically drives which products are produced, and which services are provided.  When the wrong product gets produced, my mom will probably buy it for pennies at Junk-O-Rama two years later, because it was cheap.  If nobody wanted Jay-Z’s music, (or his other ventures), he wouldn’t be rich.  He’s doing capitalism right, by understanding what the market wants, and providing it.

Well, some would say that you can’t account for bad taste.  (For the record, I like Jay-Z’s music.)  I catch myself thinking that way too, every time my girlfriend turns on terrestrial radio, and I hear some craptastic Justin Bieber song.  I choose not to listen to Biebs, but I accept that a lot of people (inexplicably) like his awful music, and that that’s why he’s rich.  He's so rich that he can afford to wear an awful hat and a leather t-shirt on a hot day in Miami to see the Heat play.  (He's been a Heat fan since Day 1, right?  Riiiight.)  

Such is life in capitalism; things that many of us think are undesirable are desirable to others.  Nobody but the most culturally arrogant fool thinks that only those things which they personally value should be valued by the rest of the world at large.

You want to know who’s a hypocrite, and a fake capitalist?  Any politician who votes to prevent Tesla from selling cars in the United States.  If you listen to FOX News, then you probably think that Tesla is a big failure; it’s not.  Their cars are in high demand, and between that, and the fact that they want to sell direct to consumers, auto dealers, and the politicians in their pockets, are furiously trying to prevent Tesla from making sales of their products.  (That’s an article from Motor Trend, lest you think I got the link from Hippie Liberals 'R Us.)

Did you ever wonder why you have to go to some scummy auto dealer to buy a new car?  (I say that as somebody who briefly sold cars.)  Everything else has gone through disintermediation, but not that industry.  Why?  The money the dealership takes comes out of my pocket, and yours, and little to no added value is provided for it, so why do we as consumers tolerate it?

Remember our friend capitalism, and its cousin, free markets?  The laws should reflect the best interests of the consumer, right?  Usually, when they don’t, it’s because of right-wing politicians who say “free market” out of one side of their mouths, and who vote to prevent free markets, to the sole benefit of their benefactors.  If they were telling the truth, they’d say that they favor free markets when their friends want them to, and they oppose them when those friends don’t.  This happens on the political left some, too, but it happens much more often on the right.

To paraphrase the late Christopher Hitchens, in politics, "They all do it" is almost always used as a point for the defense, when it should be used universally as a point for the prosecution.

Whew.  That was an old-school TB tangent there, and it felt good.  I ought to do that more often.  Anyway, back to Jay-Z.

The NFL is a cartel, as I and others have noted.  (I even linked the Ludwig von Mises Institute, for my friends who buy into that Austrian economics bullshit.)  There are 32 members of the cartel, and they’d really like to control how their game is marketed and understood by the consumer.  To some extent, you can’t blame them for that, right?  They’re trying to do business, and it’s their skin in the game, so it’s reasonable to expect that they can make their own marketing decisions.

Historically, the NFL has produced far fewer big stars than other sports.  In baseball and basketball, the games are more frequent, and the personalities of the players are more apparent.  Baseball is a series of events that are conducted by individuals, and it’s easy to attribute success and failure to those individuals.  Basketball only has five players per team on the floor at a time, and it’s also pretty easy to measure success on an individual level.  In both games, you can tell who the stars are easily, and then focus on their traits and personalities.

In football, there are 22 players on the field at once, doing complex and disparate things, and they’re all wearing helmets.  The activities of each player are highly scripted, and individuality is mostly discouraged.  On top of that, it happens so fast and simultaneously that even if, say, Troy Aikman and Joe Buck, were capable of knowing and describing everything that happened, and who did well and who did poorly on a play, there wouldn’t be enough time before the next snap. 

To the average consumer, on any play, there’s the guy who ended up with the ball, and maybe the guy who threw the ball, and 20 or 21 pretty anonymous dudes in helmets.

The game itself is the primary item for sale in the NFL.  Secondarily, it’s the teams.  Third, it’s the individual players who touch the ball, and way at the bottom, it’s every other player.

A smart business mogul like Jay-Z doesn’t jump into being an agent because he feels like he should be getting those same 3% commissions on the same contracts that every other agent gets.  That’s chump change to him.  He does so because he thinks that the marketing of the game, and more importantly, the players, isn’t being maximized. 

I guarantee that Jay-Z thinks that there’s much bigger money to be extracted from the NFL, both in terms of marketing stars on the field, as well as off.  The cartel doesn’t want that money to be extracted, of course, because it’s a redirection of disposable income from their product itself.

Why don’t NFL players have big shoe deals?  The biggest one seems to be $1 million per year, for Cam Newton.  Compare that to Derrick Rose of the Chicago Bulls, who got a $250 million lifetime deal with Adidas. 

More people watch the NFL than the NBA, at least in America.  More kids presumably play football than basketball in this country too, considering the roster sizes needed for both sports.  Some of the discrepancy surely comes from the fact that basketball shoes are worn as everyday shoes by non-players too, and football shoes lack utlity for everyday purposes, but that can’t be all of it. 

I’m sure that that is the opportunity that Jay-Z sees - to increase the star power of select athletes, and then to tie them to products, much like the NBA does.  For both star basketball players and their agents, that’s where the real money is.  An agent takes a 3% commission on contracts usually, but it’s often 10% to 15% on endorsement deals.

You’re not likely to see Roc Nation aggressively courting linemen, and other anonymous guys.  Even if everybody knows that Ryan Clady is good, is anybody going to buy the shoes he tells them to buy?

On the other hand, with guys like Victor Cruz, Geno Smith, and possibly DeSean Jackson, you have big market guys who touch the ball.  What they wear, what they say, and what they do off the field is going to be tightly scripted to maximize their Q ratings, and subsequently maximize the dollars they pull in endorsements and other marketing deals.

Have you seen some of the clothes the NBA guys are wearing now?  Get ready to start seeing the same kind of things on the Roc Nation guys, and expect them to get really polished and media-friendly.  They’ll be the players who are happy to talk to the beat reporters, and TV people.  It’s going to be all about making these guys recognizable to the public, beyond Joe Six-pack who watches the game on Sunday.

Are you ready for NFL guys to start appearing in People Magazine?  Jay-Z is in there; why can’t the guys that his firm represents be too?  I guarantee that he wants your wife to recognize these guys, so that she knows to buy DeSean Jackson shoes for your son, rather than some other thing.

One thing that Jay-Z has going for him, that no other agent can touch, is that he is, himself, an opinion-maker on what’s cool.  Just two days ago, there were reports that he was getting ready to sign a $20 million endorsement deal with Samsung.

If Jay-Z says you’re cool, there are a lot of people who are going to see you as cool.  His endorsement of a player helps to create the Q rating that the player (and he) are going to subsequently cash in on.  That’s a much bigger value-add to the player’s ability to earn than some big-name contract negotiator can offer.  David Dunn never made anybody cool; he just negotiated the same contract that 50 other agents could have gotten.  Not many people can successfully tell the market what to want, but Jay-Z can.  That ability is a goldmine.

A few years ago, LeBron James, Dwyane Wade, and Chris Bosh rocked the NBA by deciding to play together, and signaling that players could take the control of team-building away from the teams.  In a similar fashion, Jay-Z can effectively take over a big piece of the marketing of the NFL, and that predictably doesn’t sit too well with the owners of the cartel.

What’s just as interesting to me, though, is why the NFLPA opposes Jay-Z as an agent.  They were calling him a runner last week; a runner is generally a shady and disposable hanger-on type who gives college athletes hundred-dollar handshakes, and provides agents plausible deniability.  It's not a nice thing to call somebody.

I think that the NFLPA also fears losing control of their end of the marketing of the game.  More than that, though, they want to be able to control their licensed agents, and Jay-Z almost certainly doesn’t want to be controlled.  He could get licensed, and be free to personally recruit anybody he wants, but it seems he’d rather have a licensed agent (Kim Miale) working for him, and keep himself above their rules regime.

If you think of the NFL universe (in the stadiums, on TV, on the web, in sporting goods stores) as a pool of consumer money that has an aggregate limit, the fear of Roc Nation gets more clear.  If consumers will spend $10 billion per year on the NFL, and every aspect flowing from it, and not a dollar more, then what you have, conceptually, is a zero-sum game.  Every dollar that Jay-Z (and the players he represents) gets is a dollar that somebody who might have alternately gotten it can’t get.

The people who have been heretofore getting those dollars don’t want to give them up.  They’re like the scumbag auto dealers, with their $79.99 suits, and combovers, and Binaca breath, trying to fight off Tesla.

I’m pretty sure that Jay-Z views his available pool of money as being much larger, though, and while he does want to take some of that money from the aforementioned zero-sum game, his sights are set on other pools as well.  He’s somehow still the new news, and his genius is in setting the tone for what’s relevant, so that a 43 year-old guy who has made 16 albums since 1995 never becomes the old news.

Everybody who thinks that the homie Jesus is going to correct things, and send the guy back to Marcy Projects is overestimating the homie, and underestimating one of the preeminent marketing geniuses of his era.  As Hov would say himself, “I’m not a businessman, I’m a business, man.”  You’d better believe it.

1.  I’m not in the arguing business, I’m in the saying what I think business.
2.  I get my information from my eyes.

Follow me on Twitter  While you’re at it, Like our Facebook page

Ted's AnalysisYou Got Served