An Act concerning regulation of athlete agents; prescribing powers, duties and functions for the secretary of state; authorizing certain acts, fees and civil penalties; prohibiting certain acts and imposing certain penalties therefor.
Be it enacted by the Legislature of the State of Kansas:
Section 1. The provisions of sections 1 through 15 and amendments thereto shall be known and may be cited as the Kansas athlete agent act.
Sec. 2. (a) In this act:
(1) ``Person'' means an individual, company, corporation, association, partnership, or other legal entity.
(2) ``Athlete agent'' means a person that, for compensation, directly or indirectly recruits or solicits an athlete to enter into an agent contract, professional sports services contract, or financial services contract with that person or that for a fee procures, offers, promises, or attempts to obtain employment for an athlete with a professional sports team.
(3) ``Agent contract'' means any contract or agreement under which an athlete authorizes an athlete agent to negotiate to solicit on behalf of the athlete with one or more professional sports teams for the employ- ment of the athlete by one or more professional sports teams.
(4) ``Financial services contract'' means any contract or agreement under which an athlete authorizes an athlete agent to provide financial services for the athlete, including the making and execution of investment and other financial decisions by the agent on behalf of the athlete.
(5) ``Athlete'' means an individual who:
(A) is eligible to participate in intercollegiate sports contests as a member of a sports team of an institution of higher education located in Kansas that is a member of the national collegiate athletic association or another national association for the promotion and regulation of inter- collegiate athletics; or
(B) has participated as a member of such a sports team at an insti- tution of higher education located in Kansas and who has never signed a contract of employment with a professional sports team.
(b) For purposes of this act, execution by an athlete of a personal service contract with the owner or prospective owner of a professional sports team for the purpose of future athletic services is equivalent to employment with a professional sports team.
(c) For the purposes of this act, an athlete's eligibility to participate in intercollegiate sports contests ends at the end of the last sports contest in the athlete's sport that is sanctioned by the athlete's final year of eli- gibility, as determined by the governing body of the national association for the promotion and regulation of intercollegiate athletics of which the athlete's institution of higher education is a member.
(d) An individual who declares such individual eligible for recruit- ment by a professional sports team, thereby becoming ineligible to par- ticipate in intercollegiate sports contests, is not an athlete under this act and may be contracted by an athlete agent without compliance by the agent with the requirements of this act. If such individual later becomes eligible to participate in intercollegiate sports, such individual again shall be considered to be an athlete under this act, and any contract with such individual by an athlete agent is subject to the requirements of this act.
Sec. 3. (a) An athlete agent shall register with the secretary of state before the athlete agent may contact an athlete, either directly or indi- rectly, while the athlete is eligible. A registered athlete agent may make those contacts only in accordance with this act.
(b) An applicant for registration as an athlete agent shall submit a written application for registration to the secretary of state on a form prescribed by the secretary of state. The applicant shall provide the in- formation required by the secretary of state, which shall include:
(1) the name of the applicant and the address of the applicant's prin- cipal place of business;
(2) the business or occupation engaged in by the applicant for the five years immediately preceding the date of application;
(3) a description of the applicant's formal training, practical experi- ence, and educational background relating to the applicant's professional activities as an athlete agent;
(4) if requested by the secretary of state, the names and addresses of five professional references; and
(5) the names and addresses of all persons, except bona fide employ- ees on stated salaries, that are financially interested as partners, associates, or profit sharers in the operation of the business of the athlete agent, except that an application for registration or renewal by any individual licensed to practice law in Kansas shall state only the names and addresses of those persons that are involved in the activities of the athlete agent and is not required to state the names and addresses of all persons who may be financially interested as members of a law firm or professional corporation but who do not become involved in the business of the athlete agent.
(c) If the applicant is a corporation, the information required by sub- section (b) shall be provided by each officer of the corporation. If the applicant is an association or partnership, the information shall be pro- vided by each associate or partner.
(d) A certificate of registration issued under this act is valid for 12 months from the date of issuance. The secretary of state by rule and regulation may adopt a system under which certificates of registration expire on various dates during the year. For the year in which the regis- tration expiration date is changed, the renewal fee payable on the anni- versary of the date of issuance shall be prorated so that each registrant pays only that portion of the fee that is allocable to the number of months during which the registration is valid. On the renewal of the certificate of registration on the new expiration date, the total registration renewal fee is payable.
(e) A registered athlete agent may renew the registration by filing a renewal application in the form prescribed by the secretary of state, ac- companied by the renewal fee. The renewal application must include the information prescribed by the secretary of state, which shall include:
(1) The names and addresses of all athletes for whom the athlete agent is providing professional services for compensation at the time of the renewal; and
(2) the names and addresses of all athletes not currently represented by the athlete agent for whom the athlete agent has performed profes- sional services for compensation during the three years preceding the date of the application.
(f) Each application for the registration or renewal of registration shall be accompanied by a fee of $1,000.
(g) When an application for registration or renewal is made and the registration process has not been completed, the secretary of state may issue a temporary or provisional registration certificate that is valid for no more than 90 days.
(h) (1) Before the issuance or renewal of a certificate of registration, an athlete agent shall deposit with the secretary of state a surety bond in the sum of $100,000, payable to the state and conditioned that the person applying for the registration will comply with this act, will pay all amounts due any individual or group of individuals when the person or the person's representative or agent has received those amounts, and will pay all dam- ages caused to any athlete by reason of the intentional misrepresentation, fraud, deceit, or any unlawful or negligent act or omission by the regis- tered athlete agent or the agent's representative or employee while acting within the scope of the representative's authority or within the scope of employment of the employee.
(2) An athlete agent may provide to the secretary of state proof of an equivalent amount of professional liability insurance in lieu of a surety bond, if such professional liability insurance provides coverage for the same types of conduct, acts, or activities as are covered by the bond otherwise provided for in this section.
(3) This subsection (h) does not limit the recovery of damages to the amount of the surety bond.
(i) If an athlete agent fails to file a new bond with the secretary of state not later than the 30th day after date of receipt of a notice of can- cellation issued by the surety of the bond, the secretary of state shall suspend the certificate of registration issued to that athlete agent under the bond until the athlete agent files a new surety bond with the secretary of state.
(j) An applicant for registration that is a corporation, an association, a partnership, or another entity, and not an individual or a sole proprie- torship, shall file with the secretary of state, accompanying the application for registration or the renewal of any registration, a statement setting forth the names and addresses of all individuals who will recruit or solicit an athlete to enter into an agent contract, a professional sports services con- tract, or a financial services contract with the agent.
(k) If a registered athlete agent changes the individuals who recruit or solicit athletes on behalf of the agent, the agent, not later than the 30th day after the date the change is made, shall file with the secretary of state a statement setting forth the changes to the statement filed under subsection (j).
(l) The secretary of state may prescribe a form for the statements or other information required under this section.
Sec. 4. This act does not apply to a person who, for compensation, directly or indirectly recruits or solicits an athlete to enter into a contract under which the person provides financial services to the athlete if:
(1) The person is licensed or registered by this state as a broker- dealer, an agent, or an investment advisor for securities, a real estate broker or salesperson, an insurance agent, or another licensed or regis- tered financial professional;
(2) the services are of a type that are customarily provided by persons in those regulated professions; and
(3) the person does not:
(A) Recruit or solicit the athlete to enter into an agent contract or a professional services contract on behalf of the person, an affiliate, a re- lated entity, or a third party; or
(B) procure, offer, promise, or attempt to obtain employment for an athlete with a professional sports team.
Sec. 5. (a) The secretary of state shall actively enforce this act and conduct investigations necessary to ensure compliance.
(b) If the secretary of state determines that a violation has occurred, the secretary of state shall refer the case to the attorney general for pros- ecution and take disciplinary action under subsection (e). On the deter- mination of the secretary of state that a violation is occurring or is threat- ened, the secretary of state or attorney general may bring an action in district court for Shawnee county to enjoin the violation or threatened violation.
(c) On receipt of a written request by a registered athlete agent, the secretary of state shall provide to the agent the names of the compliance coordinators designated under subsection (e) of section 9 and amend- ments thereto and on request also shall provide a copy of the standards adopted by an institution of higher education under subsection (f) of section 9 and amendments thereto.
(d) The secretary of state shall publish, annually or more frequently, information that prescribes an institution of higher education's compli- ance responsibilities under this act and shall mail copies of the informa- tion to the athletic director or other appropriate official at each institution of higher education in Kansas, return receipt requested. The secretary of state shall update the material as necessary.
(e) The secretary of state shall deny a certificate of registration to an applicant who has been convicted of a felony or of a misdemeanor in- volving moral turpitude and may deny, suspend, or revoke a certificate of registration issued under this act for a violation of this act or a rule and regulation adopted under this act or take other disciplinary actions.
Sec. 6. There is hereby created in the state treasury the athlete agent registration fee fund which shall be administered by the secretary of state. All moneys credited to the athlete agent registration fee fund shall be used for the expenses incurred for the performance of the duties and functions of the secretary of state under the Kansas athlete agent act. All expenditures from the athlete agent registration fee fund shall be made in accordance with the provisions of appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the secretary of state or by a person or persons designated by the secretary. Fees, civil penalties and other moneys received under this act by the secretary of state shall be deposited in the state treasury to the credit of the athlete agent registration fee fund.
Sec. 7. (a) Any agent contract or financial services contract to be used by a registered athlete agent with an athlete shall be on a form approved by the secretary of state.
(b) Each contract shall state the fees and percentages to be paid by the athlete to the athlete agent and shall include the following statements printed in at least 10-point type that is boldfaced, capitalized, underlined, or otherwise set out from surrounding written material so as to be con- spicuous:
(1) THIS ATHLETE AGENT IS REGISTERED WITH THE SECRETARY OF STATE OF THE STATE OF KANSAS. REGISTRATION WITH THE SECRETARY OF STATE DOES NOT IMPLY APPROVAL OR ENDORSEMENT BY THE SECRETARY OF STATE OF THE COMPETENCE OF THE ATHLETE AGENT OR OF THE SPE- CIFIC TERMS AND CONDITIONS OF THIS CONTRACT.
(2) DO NOT SIGN THIS CONTRACT UNTIL YOU HAVE READ IT OR IF IT CONTAINS BLANK SPACES.
(3) IF YOU DECIDE THAT YOU DO NOT WISH TO PURCHASE THE SERV- ICES OF THE ATHLETE AGENT, YOU MAY CANCEL THIS CONTRACT BY NO- TIFYING THE ATHLETE AGENT IN WRITING OF YOUR DESIRE TO CANCEL THE CONTRACT NOT LATER THAN THE 16TH DAY AFTER THE DATE ON WHICH YOU SIGN THIS CONTRACT.
(c) Each registered athlete agent shall file with the secretary of state a copy of each agent contract and financial services contract entered into with an athlete by the athlete agent. Such a contract shall include a sched- ule of fees that the agent may charge to and collect from an athlete and a description of the various professional services to be rendered in return for each fee. The athlete agent may impose charges only in accordance with the fee schedule. Changes in the fee schedule may be made, but a change does not become effective until seventh day after the date on which a copy of the contract as changed is filed with the secretary of state.
(d) If a multiyear professional sport services contract is negotiated by a registered athlete agent for an athlete, the athlete agent may not collect in any twelve-month period for the agent's services in negotiating the contract a fee that exceeds the amount the athlete will receive under the contract in that twelve-month period.
(e) In addition to filing with the secretary of state a copy of each contract made with an athlete, if the athlete is a student at an institution of higher education located in Kansas, the athlete agent shall file a copy of the contract with the athletic director of the institution. The athlete agent shall file the contract not later than the fifth day after the date on which the contract is signed by the athlete.
Sec. 8. (a) In all forms of advertising used by the athlete agent, the agent shall disclose the name and address of the agent.
(b) An athlete agent may not:
(1) Publish or cause to be published any false, fraudulent, or mis- leading information, representation, notice, or advertisement or give any false information or make any false promises or representations concern- ing any employment to any person;
(2) divide fees with or receive compensation from a person exempt under section 3 and amendments thereto or a professional sports league or franchise or its representative or employee;
(3) enter into any agreement, written or oral, by which the athlete agent offers anything of value to any employee of an institution of higher education located in Kansas in return for the referral of any clients by that employee;
(4) offer anything of value to induce an athlete to enter into an agree- ment by which the athlete agent will represent the athlete; or
(5) except as otherwise provided by this act, directly contact an ath- lete to enter into any agreement, written or oral, by which the athlete agent will represent the athlete, until after completion of the athlete's last intercollegiate contest and may not enter into an agreement before the athlete's last intercollegiate contest that purports to take effect at a time after that contest is completed.
(c) This act does not prohibit or limit an athlete agent from sending to an athlete written materials relating to the professional credentials of the agent or to specific services offered by the agent relating to the rep- resentation of an athlete in the marketing of an athlete's athletic ability or reputation or to the provision of financial services by the agent to the athlete. This act does not prohibit an athlete or the athlete's parents, legal guardians, or other advisors from contacting and interviewing an athlete agent to determine that agent's professional proficiency in the represen- tation of an athlete, in the marketing of the athlete's athletic ability or reputation, or the provision of financial services by the agent on behalf of the athlete.
Sec. 9. (a) Each institution of higher education located in Kansas may sponsor athlete agent interviews on its campus at which a registered ath- lete agent may interview an athlete to discuss the athlete agent's provision of financial services and advice to the athlete or the athlete agent's rep- resentation of the athlete in the marketing of the athlete's athletic ability or reputation. An interview is subject to the requirements of this section.
(b) The secretary of state shall notify each registered athlete agent in writing that a copy of the standards adopted by an institution of higher education relating to the conduct of an athlete agent interview at the institution is available from the secretary of state as provided by subsec- tion (c) of section 5, and amendments thereto. The notice shall include a brief statement that the standards adopted by an institution of higher education specify the policies of that institution relating to the time, place, and duration of athlete agent interviews at the campuses of that institution and that each institution has a designated compliance coordinator who may be contacted by the agent for further information.
(c) The athlete agent shall strictly adhere to the specific rules of each separate institution with regard to the time, place, and duration of the athlete agent interviews. The interviews must be conducted during a pe- riod of at least five but not more than 30 consecutive business days and, as designated by the institution, shall be conducted during the off-season training period for the athlete's sport that precedes the athlete's final year of eligibility.
(d) The signing of an athlete agent contract by an athlete may occur at any time permitted by the rules or regulations of the national associ- ation for the promotion and regulation of intercollegiate athletics of which the athlete's institution of higher education is a member.
(e) Each institution of higher education in Kansas shall designate an individual to serve as compliance coordinator for the institution. The in- stitution shall report the name of its compliance coordinator to the sec- retary of state in the manner prescribed by the secretary of state. The compliance coordinator shall organize the athlete interview schedule for the coordinator's campuses and shall ensure the compliance of the insti- tution and its athletes with this act and the rules and regulations adopted under this act. The compliance coordinator or secretary of state shall notify each registered athlete agent, in writing, of the interview period not later than the 30th day before the date the interview period is sched- uled to begin. On receipt of a written request, the compliance coordinator shall provide a registered athlete agent with a copy of the standards adopted by the institution under subsection (f).
(f) Each institution of higher education in Kansas shall adopt stan- dards relating to the implementation of this act at that institution. The standards shall include specific guidelines relating to the athlete agent interview program, including the scheduling of interview periods, the duration of an interview period, locations on campus where interviews may be conducted, and the terms and conditions under which an athlete agent may contact an athlete during an interview period. The institution shall submit the standards to the institution's athletic council or analogous office for approval and shall file the standards with the secretary of state not later than the 30th day after the date the standards are approved. If the institution amends the standards, it shall file the amended standards with the secretary of state not later than the 30th day after the effective date of the amendment.
Sec. 10. (a) A registered or unregistered athlete agent who violates this act may be subject to:
(1) A civil penalty, as provided by section 12, and amendments thereto;
(2) forfeiture of any right of repayment for anything of value received by an athlete as an inducement to enter into any contract;
(3) a refund of any consideration paid to the athlete agent on an athlete's behalf; and
(4) reasonable attorney fees and court costs incurred by an athlete in suing and recovering against an athlete agent for a violation of this act.
(b) Any contract with an athlete that is negotiated by an unregistered athlete agent is void.
(c) An athlete agent commits an offense if the agent intentionally or knowingly violates this act or any rule and regulation adopted by the secretary of state under this act. A violation of this subsection is a Class A misdemeanor.
Sec. 11. (a) An institution of higher education located in Kansas that is adversely affected by activities of an athlete agent who violates this act may sue the athlete agent for damages as provided by this section.
(b) For purposes of this section, an institution of higher education is adversely affected by the activities of an athlete agent if, because of the activities of the athlete agent, the institution is disqualified or suspended from participation in intercollegiate sports contests by a national associ- ation for the promotion and regulation of intercollegiate athletics and, because of that disqualification or suspension, the institution:
(1) Loses revenue from media coverage of sports contest;
(2) loses the right to grant athletic scholarships in the sport affected;
(3) loses the right to recruit athletes; or
(4) otherwise suffers an adverse financial impact.
(c) An institution that prevails in a suit brought under this section may recover:
(1) Actual damages;
(2) exemplary damages;
(3) costs of court; and
(4) reasonable attorney fees.
Sec./007006/(a) If the secretary of state determines that a person regu- lated under this act has violated this act or a rule and regulation adopted under this act in a manner that constitutes a ground for disciplinary action under section 5, and amendments thereto, the secretary of state may assess a civil penalty against that person as provided by this section.
(b) The secretary of state may assess the civil penalty in an amount not to exceed $25,000. In determining the amount of the civil penalty, the secretary of state shall consider the seriousness of the violation.
(c) If after examination of a possible violation and the facts relating to that possible violation the secretary of state concludes that a violation has occurred, the secretary shall issue a preliminary report that states the facts on which the conclusion is based, the fact that a civil penalty is to be imposed, and the amount to be assessed. Not later than the 10th day after the date on which the secretary issues the preliminary report, the secretary shall send a copy of the report to the person charged with the violation together with a statement of the right of the person to a hearing relating to the alleged violation and the amount of the penalty.
(d) Not later than the 20th day after the date on which the report is sent, the person charged either may make a written request for a hearing or may remit the amount of the civil penalty to the secretary of state. Failure either to request a hearing or to remit the amount of the civil penalty within the time provided by this subsection shall constitute a waiver of the right to a hearing under this act. If the person charged requests a hearing, the hearing shall be conducted in the manner provided under the Kansas administrative procedure act. If it is determined after the hearing that the person has committed the alleged violation, the sec- retary shall give written notice to the person of the findings established by the hearing and the amount of the penalty and shall enter an order requiring the person to pay the penalty.
(e) Not later than the 30th day after the date on which the notice is received, the person charged shall pay the civil penalty in full or, if the person wishes to contest either the amount of the penalty or the fact of the violation, forward the assessed amount to the secretary of state for deposit in an escrow account. If, after judicial review, it is determined that no violation occurred or that the amount of the penalty should be reduced, the secretary shall remit the appropriate amount to the person charged with the violation not later than the 30th day after the date on which the judicial determination becomes final.
(f) Failure to remit the amount of the civil penalty to the secretary of state within the time provided by subsection (e) results in a waiver of all legal rights to contest the violation or the amount of the penalty.
(g) A civil penalty owed under this section may be recovered in a civil action brought by the attorney general at the request of the secretary of state.
(h) Any penalty collected under this section shall be deposited in the state treasury to the credit of the athlete agent registration fee fund.
Sec./007006/(a) An athlete agent shall keep records as provided by this section and shall provide the secretary of state with the information con- tained in the records on request. The records shall contain:
(1) The name and address of each athlete employing the athlete agent, the amount of any fees received from the athlete, and the specific services performed on behalf of the athlete; and
(2) all travel and entertainment expenditures incurred by the athlete agent, including food, beverages, maintenance of a hospitality room, sporting events, theatrical and musical events, and any transportation, lodging, or admission expenses incurred in connection with the enter- tainment.
(b) The records kept by the athlete agent under subdivision (2) of subsection (a) shall adequately describe:
(1) The nature of the expenditure;
(2) the dollar amount of the expenditure;
(3) the purpose of the expenditure;
(4) the date and place of the expenditure; and
(5) each person on whose behalf the expenditure was made.
Sec./007006/(a) The secretary of state may require and compel, by sub- poena or summons issued by the secretary of state, the attendance and testimony of witnesses and the production of any books, accounts, re- cords, magnetic or electronic recordings, papers, contracts, correspon- dence, or other records the secretary deems relevant or material to a matter which the secretary of state has authority under this act to inves- tigate. For this purpose, the secretary of state or any officer designated by and acting on behalf of the secretary of state may administer oaths and affirmations, examine witnesses, and receive evidence. Any information or evidence received shall be treated as confidential by the secretary of state and shall not be open to public inspection except by court order and are exempt from disclosure under the open records act.
(b) Service of any subpoena or summons issued by the secretary of state may be made, at the secretary's discretion, by the secretary, the secretary's authorized agent, a sheriff, or a constable. Service may be made on any natural person by delivering a duly executed copy of the subpoena or summons to the person to be served or by mailing such copy by registered or certified mail, return receipt requested, to such person at the person's residence or principal office or place of business. Service of any subpoena or summons issued by the secretary of state may be made on any person other than a natural person by delivering or by mail- ing a duly executed copy of the subpoena or summons to a person to whom delivery would be appropriate under state law in a civil suit. A verified return by the individual serving the subpoena or summons setting forth the manner of service shall be proof of such service, and, in the case of service by registered or certified mail, the return shall be accompanied by the return post office receipt of delivery of the subpoena or summons.
(c) On the failure to obey a subpoena or the refusal of a witness whose testimony is sought to appear or to answer, the secretary of state shall refer the matter to the attorney general for enforcement. The attorney general may apply to a district court for Shawnee county for an order requiring compliance. If the district court determines that good cause exists for the issuance of the subpoena, the court shall order compliance. The district court may modify the requirements of a subpoena that the court determines are unreasonable. Failure to obey the order of the dis- trict court is punishable as contempt.
(d) The secretary of state may propound to any athlete, compliance coordinator designated under subsection (e) of section 9, and amend- ments thereto, or any person subject to the provisions of this act and to any officer, director, partner, or associate thereof, such interrogatories as may be reasonable, necessary, and proper to enable the secretary of state to ascertain whether a person regulated by this act is in compliance with all the provisions of this act. Notwithstanding the foregoing, the secretary of state shall not propound interrogatories for athletes not represented by counsel. The interrogatories shall be answered within 30 days after mailing or within such additional time as shall be fixed by the secretary of state, and the answers shall be full and complete and shall be made in writing and under oath. If the interrogatories are directed to an individual, they shall be answered by the individual, and if directed to a corporation, association, partnership, or other legal entity, they shall be answered by an officer, associate, partner, or authorized representative of the legal entity.
(e) If the interrogatories and answers disclose a violation of the pro- visions of this act, the secretary of state shall take action under subsection (b) of section 5, and amendments thereto.
(f) The interrogatories and answers shall be confidential and shall not be open to public inspection except by court order and are not subject to the provisions of or disclosure under the open records act.
(g) The secretary of state may, at the secretary's discretion, disclose any confidential information in the secretary's possession to any govern- mental authority or any quasi-governmental authority.
Sec./007006/(a) The secretary of state shall adopt rules and regulations necessary for the administration of this act.
(b) Except as otherwise provided by this act, all administrative pro- ceedings pursuant to this act shall be conducted in accordance with and shall be subject to the provisions of the Kansas administrative procedure act and the act for judicial review and civil enforcement of agency actions.
Sec./007006/This act shall take effect and be in force from and after its publication in the statute book.
Approved April 17, 1996.