Gervon Dexter sues to get out of 25 year NIL Deal.
 

https://www.espn.com/college-footbal...l-violated-law

The NIL contract that Chicago Bears rookie Gervon Dexter signed with a speculative investment capital company while playing at the University of Florida in 2022 violated a state NIL law in place at the time, the Florida state legislator who sponsored the bill told ESPN on Tuesday.

Dexter, a second-round draft pick, agreed to pay Big League Advance Fund (BLA) 15% of his pre-tax NFL earnings for the next 25 years in exchange for a one-time payment of $436,485 in 2022, according to a copy of a federal lawsuit filed in the U.S. District Court in Gainesville, Florida, on Friday.

According to published reports, Dexter signed a four-year, $6.72 million contract with the Bears on June 16, meaning he would owe BLA about $1 million over the lifetime of that deal.

Florida Rep. Chip LaMarca, who proposed the initial legislation in 2020 that allowed college athletes in Florida to profit off their name, image and likeness, described Dexter's deal as a "predatory loan."

"The deals were supposed to be that an athlete could participate in the free market and when they graduate, whether they go on to play professionally or not, any future contracts are null and void," LaMarca said. "In other words, we didn't want someone having access to someone's future without them having proper guidance and proper representation."

The original Florida NIL law, Senate Bill 646, included the following provision: "The duration of a contract for representation of an intercollegiate athlete or compensation for the use of an intercollegiate athlete's name, image or likeness may not extend beyond her or his participation in an athletic program at a postsecondary educational institution."

He's a ****ing idiot for signing that but what in the actual **** is going on with these NIL deals. I hope this is just an incredibly extreme case and not the norm.

What a ****ing slimy ass company. Pretty much got a ****ing pay day loan. I've never heard of an NIL deal like this, but I bet there are many like it. Sleezy ass ****s.

Why would you sign 15% for 25 years... that is just stupid! Even at a base NFL salary they are making way more than 400K.

Scholarship athletes getting suckered into student loans too.

Wish in one hand, shit in the other - tell me which fills up first.

I'd be SHOCKED if this isn't incredibly common. And if this investment company doesn't have a pretty iron-clad contract, I'd be equally shocked.

Best argument Dexter may have is some unconscionability argument but man, that seems pretty long. I don't know if there are some weird rule against perpetuities kind of arguments he could try but those are pretty arcane and don't typically get you very far.

Guy signed a bad deal - happens all the time. He wasn't gonna give the $400K BACK if he blew out his knee.

This feels like a strike suit designed to lower the amount he'll need to pay or more likely cut off that amount after this rookie deal.

The NIL deal that's the equivalent of giving college freshmen a free t-shirt if they sign up for a 30% credit card

Wow

I'm also guessing there's a choice of law provision within that contract that gets around that Florida statute, but that's gonna be a pretty sticky argument - those can get pretty complicated to argue in favor of.

Only reason to make such a bad deal from the player end is if he believed he would not have much of a career in the NFL.

Eh. This seems like he'll actually have a pretty easy time breaking this deal. But I know **** all about the intricacies of how that would work.

The original Florida NIL law, Senate Bill 646, included the following provision: "The duration of a contract for representation of an intercollegiate athlete or compensation for the use of an intercollegiate athlete's name, image or likeness may not extend beyond her or his participation in an athletic program at a postsecondary educational institution."

Dibs on Dextor's conservatorship

400k now for 15% of your future earnings isnt a bad deal when you could suck or get injured and not see that kind of money ever again.

You'll go down a business licensure rabbithole that I simply can't speak to at that point.

The contract terms will almost certainly contain a choice of law provision asserting any dispute will be governed by the law of X state (almost certainly not Florida). Now the other side of that coin is likely to be that there may be requirements to conduct business in Florida (i.e. registration requirements) that in some way invalidate those choice of law provisions - hard to say.

But I would think that a company that's in a position to pay an athlete $400K (and lets not act like that's not a pretty goddamn massive number for a college athlete that maybust out altogether) would also have the financial backing to make pretty sure they're on firm legal footing.

This is a contract offered in 2022 with an NIL statute passed in 2020. They had a couple years to make sure they had their ducks in a row.

I'm not gonna say 'oh poor Dexter' on this one - the guy got more money than many folks will see in their lifetimes. With the time value of money, this company will essentially break even over his rookie deal (That $430K with interest rates being what they are will double pretty easily over about 6 years) and there are precisely ZERO guarantees past that. And there were no guarantees BEFORE that rookie deal when the contract was offered.

It's the 2nd contract where there's any real return and in the meantime it's essentially an unsecured loan for nearly half a million.

Honestly, that's a business practice that, the math says, will not work over any prolonged period of time. It would take 2 or 3 bad investments to put a company like that underwater.

It seems less of an NIL issue and more of a usury issue. I am not sure what they used his name/likeness for to make it an NIL agreement as much as it is just a loan.

Usury is difficult to argue when there's no guaranteed return.

But most of the time usury becomes a thing north of 17% or so. Some states are lower but maybe 15%?

I mean you're doubling every 4 years at 17%, give or take. So that 400k becomes 1.75 million by 2030. With no guarantee of any second contract, how can you call it usurious when you may not even get a 15% ROR over the useful life of the deal?

It requires a lot of speculation and contract law LOATHES speculation.

That's why I love not being a lawyer. I can talk about shit and have no clue if I'm right or wrong but it sounds good to other dummies who also don't know.

And it’s pre-tax money. This is such a ridiculously predatory deal. Yikes.

I recognize that he could have blown out his back or been killed by a rampaging circus elephant in 2022 and this would be worth nothing to the company, but on my first sniff this seems to be someone who's good at math defrauding someone who's bad at math.

First, I assume the company would find a way to insure against the contract being worth nothing. Even if that costs them 25 percent of the investment, then their maximum risk is about $100,000.

Then it's just a matter of grading his likely draft slot, and I think players are sent those from the league every year. There's obviously guessing and wiggle room there, but the company can easily build a model around that of expected value by looking at contract amounts and expected career lengths.

As it stands now, the company will start turning a profit in Year 2 of the guy's career. If you're a guy being graded as a second-round pick, my hunch is that you're almost certain to have a career that's longer than two years. This seems like a no-brainer win for the company and almost a no-brainer loss for ol' Gervon.

I'd want to look up contract amounts and career lengths before investing, but my first reaction is that I would gladly do this for every second-round draft pick in the league and then go relax on my yacht.

I suspect that Gervon is not good at math and is not good at delayed gratification, and that company took advantage of those facts.

I believe these types of contracts are common for prospective MLB players in Latin America.

He's a defensive tackle - they don't go top 2 rounds very often. As for Dexter, I had him as a 3rd rounder and I think most did; the 2nd round contract is a happy accident.

Let's say Dexter is not Gervon Dexter but rather "Gervon Dexter, LLC". How is this different than a company that needs startup capital and sells 25% of its ownership interest for seed money to get off the ground?

That's the entire foundation of the VC industry. And a TON of venture capitalists lose their ass.

The deal's worth almost exactly a million bucks to the lender. Over the first 4 years of that deal (5 years from the date of the loan) it's almost EXACTLY a 15% rate of return. And that's with a floor of zero and a likely top 15% set of outcomes that have you below a high 2nd round pick.

It it a deal that may work out really poorly for Dexter? Oh yeah - no question. Does it get to 'unconscionable'? I don't see it. Through 2 years of his rookie deal (3 years from the date of the loan) they'd be about break-even from a 10% rate of return on that same $430K.

A 'loss' or a 'win' isn't illegal. You're free to make bad deals in this world, just as that guy who sold his 10% share in Microsoft for a few thousand bucks way back when did. Happens all the time.

Don't get me wrong - there's a long tail, but the guy can be out of the league at any point and essentially zero floor. This guy didn't get a ham sandwich and suit - the guy asked for, and received, damn near a half-million dollars.

He's no angel in all this.

They are. I honestly can't remember which ones were upheld and which ones weren't. My memory is they're typically valid.

EDIT:

Hell, looks like Big League Advance got sued for this several years ago:

https://blogs.fangraphs.com/francisc...mason-moments/

Mejia issued an apology and paid their legal bills. Damn.

Yeah. Tatis and De La Cruz actually have similar contracts with this exact agency I'm pretty sure.

Okay, I looked up guys who were drafted in the second round between 2000 and 2007, since nearly all of those guys are going to be out of the league now. There was 251 guys drafted in the 2nd round in those years, and here's how long their careers lasted.

7 players were in the league for 1 year
13 were in the league for 2 years
8 were in the league for 3 years
20 were in the league for 4 years
25 played 5 seasons
22 played 6 seasons
34 played 7 seasons
29 played 8 seasons
34 played 9 seasons
19 played 10 seasons
18 played 11 seasons
10 played 12 seasons
4 played 13 seasons
5 played 14 seasons
2 played 16 seasons (Mike Nugent and Andrew Whitworth)
1 played 20 seasons (Brees)

So if your breakeven is in Year 2, then there's a 92 percent chance that you'll break even or better, and 59 guys (24 percent) played 10+ years. Your return will be stupendous on a 10 year player, and we're not even calculating 15 percent of Drew Brees' 20th year of pay.

I recognize that there was no guarantee that the guy would go in the second round. He could have gone in the 1st or the 3rd or slid to the 7th. But there's information out there that will inform this bet pretty well, and this is ridiculously tilted toward the lender.

Yeah, there's the question of whether someone should be "allowed" to sign a bad deal, and I'm not a lawyer. I can't comment on that.

But I will say that I would very much like to invest in a company that makes these deals, because I think they're going to win a strong majority of the time and some of those wins, if honored, are going to be gushing oil wells of money for stupendous returns.

Bet Mr Dexter actually does not have any of his 436k left. Now he wants out of the deal.
sounds about right

Why would this company give him any money at all if not for the exact reason to make money on that investment in the future?

JFC do contracts mean nothing anymore?
Dipshits sign paperwork without reading it, or understanding it (get a ****ing lawyer to review it... it costs very little to do so), then play victim when they are held accountable to the contract they signed.

Boo ****ing hoo. :grr:

And my question is why he needed that $436k in 2022 so badly that he was willing to give up 15 percent of his career topline earnings? Did he have a relative being held hostage by Somali pirates? Did some uninsured loved one need a heart transplant? You'd have to have a really, really good reason to need the money that badly.

And yeah, there's an insurance value to it, and I get that. But I bet he could have purchased actual insurance on future earnings for a fraction of the cost.

Yeah, we have no doubt that that's their motive, and I think the odds are good that they'll make a lot of money.


The only way this is a good bet for Gervon is if he hates football and he's running a grift on them knowing that he'll retire after one year. But he probably wouldn't be suing them if that's the case.

Chiefs fans are complaining that Chris Jones isn’t showing up.

Boo ****ing hoo. Didn’t Chiefs fans understand the contract and know that he had every right to do this?

Not sure what your point is here...

CJ is under contract. By not showing up he pays both fines AND loses his weekly salary (which is subtracted from his annual cap count).

If your point is the player (CJ in this instance) signed a contract & is now obligated to it, regardless of fines & lost revenue, then yeah, sure, obvious fact is obvious.

If your point is fans are bitching because CJ is failing to meet his contractual obligations, then yeah, again, the fans have a point: him skipping out on contractual obligations is a failure on his behalf. Because, well, it IS. He is failing both himself and his team.

If your point is other, then please specify.

Sure. The point is he has a contract that allows him to miss these games and not get paid. He's okay with that. Why are you mad if this were part of the initial agreement?

Are the Chiefs and fans being taken advantage of? Why? The organization entered into this agreement with CJ. If it didn't want to give him the option of missing games and not getting paid, it shouldn't have offered him this contract.

That's the exact argument you're making with Dexter. The guy signed a contract he probably didn't entirely understand and now is being disadvantaged because of it. You have no sympathy for that, but you feel like the Chiefs are being persecuted by CJ's actions?

Chris Jones has no contractual obligation to play for the Chiefs for the first 7 weeks to accrue a season's worth of employment. You similarly have no contractual obligation to go into work tomorrow and complete your job. It's at-will employment and he and you can choose to sleep in and just not get paid.

It's just a bit hypocritical to be so "I abide by the letter of the contract" with Dexter even though the guy was clearly being taken advantage of while castigating CJ because he's doing exactly what's allowed in his contract.

(Note: I'm not trying to argue that I like or support what CJ is doing, but I think it's pot-kettle-black to criticize Dexter as not living up to a contract when Chiefs fans don't appreciate that - as employers of CJ - the organization has given him the option to do exactly what he's doing right now.)

I'd say he saw the money and didn't think about the whole deal

I am pretty sure that a contract cannot override actual legislation.

Greed blinds the mind to it's consequences. (Hey CJ, are you listening???)

Well don't laws mean anything? The Florida rep that sponsored the bill says that the deal was illegal.

You seem like an old bitter dipshit that doesn't care if people get taken advantage of, because you've never done anything dumb in your life. He was just 20 years old when he agreed to the deal and sometimes young adults don't do the best things. NIL isn't supposed to be a loan that is paid back. It's for the company to pay the player, so that it can use that players name, image, and likeness for there business.

Don't you think the world would be a better place if sleezy companies weren't allowed to prey on young people and take advantage of kids in shitty situations just trying to improve their lives? Hell, old people fall for shit all the time and they should really know better.

Oh! I'm excited to share some completely obscure trivia that I learned the other day. This is not meant to be a dispute, and I agree with your general thought, but I read some history related to this very topic.

Apparently when the USA was being formed, a bunch of states made territorial claims west of the Appalachians. There were a lot of negotiations about this because the states that didn't make claims didn't want the other states becoming much larger than them.

Eventually, the expansionist states agreed to give up their claims. However, there was a problem with Georgia. The state legislature had sold land claims in modern-day Alabama and Mississippi while Georgia was claiming those areas, and took bribes to sell it very cheaply. After public outcry and voting the corrupt people out of office, the new state legislature passed legislation to invalidate the sales. The people who got the land cheap (presumably crooks) sued, saying it was a legal contract. The case eventually went to the Supreme Court, and the Court ruled that legislation could not override a sales contract if the legislation was created after a contract.

I had to bring that up, because what are the odds that it would be relevant?

Edit: I looked it up. It was the Yazoo Land Scandal and I corrected some facts: https://en.wikipedia.org/wiki/Fletcher_v._Peck

https://cdn.theatlantic.com/thumbor/...w/original.png

I'm assuming that is why this is a Federal Lawsuit

I'm not a lawyer - but I stayed at a Holiday Inn Express last night

https://dockets.justia.com/docket/fl...cv00228/480720


https://www.law.cornell.edu/uscode/text/28/1332

The article states the contract was signed when the law was already in effect. I'm assuming the lawsuit was filed in federal court because BLA is incorporated in another state while Dexter is a Florida citizen. There probably is a clause in the contract governing which state law applies. I'm assuming the argument is going come down on where was the contract communicated/executed.

That's lawyer talk. I am but a humble historian.

First, interest rates are projected to go from the lows 5s to the mid 3s over the next 6yrs so assuming constant rates is flawed.

Second, but if you want to assume simplicity at current 5.25 spot rates, it takes you more like 13-14 years to double your money (rule of 72). For you to be right in terms of doubling your money over 6yrs, one would need to be receiving around 12% and there’s nothing remotely riskless that involves that return.

Third, that $430k is pre-tax. I think his effective federal tax rate (I’ll assume Florida so no state and local) would be about 31% which means he actually takes home a bit less than 300k of it. Meanwhile of course he’s paying out pre-tax income through the life of the deal.

That did not read like a NIL agreement, it read like a loan. But I’m no expert.

Hey dipshit....cj skipping out was not part of the contract. At will employment and a CONTRACT are not the same. Dexter was an adult when he signed his contract. It was a bad one...but tough shit. You sign, you are obligated.

Hey dipshit, the agreement was against the law. Also, we have to stop with thinking it's fine for companies to take advantage of people. It's why this country has gone to shit.

CJ is well within his right to miss whatever he wants. He's clearly not breaching his contract, because if he was they could just get out of it. Dipshit.


**** I hate everything about you and your ilk.

1. If it is against the law then it will be null and void, no? It currently is not null & void however, so you appear to be simply going by the word of one legislator (cherry-picking)

2. The flip side of that coin is individuals need to start taking responsibility for their actions and not play the "woe is little old me, I've been taken advantage of by THE MAN(tm)." Play stupid games, win stupid prizes.

3. CJ can hold out if he wants, accrue fines, and miss out on paychecks. This lessens his cap hit in 2023 and makes the possibility of tagging him at a substantially lower number in 24 much greater, also making him a real target for trade. It's his loss, financially. His holdout could very well negatively impact the team, thus fan ire. It's not rocket surgery.

4. You talk like someone who has never been punched in the ****ing mouth before.

That is where I am at. My understanding is that NIL is to allow players to be paid for allowing their Name, Image, or Likeness to be used for advertising purposes. The idea that they have to return some (or more in cases like this) of that investment to the company does not make any sense to me at all.

Please let me know where I am wrong here.

There were two terms included in the agreement: an initial term that finished once Dexter's collegiate eligibility expired and an extended term that commenced when he left college.

In a questionnaire that was part of the agreement, Dexter initialed a section where he was asked if he agreed to give BLA 15% of his "future professional football earnings."

Oof. That second term is the killer.

The team signed Chris Jones to a contract and he has the right to not show up and not get paid. I'm sure there's an at-will employee clause in his contract that allows them to fire him and allows him to quit.

Imagine you’re so stupid and unconfident in yourself that you agree to this kind of deal.

“Dexter, a second-round draft pick, agreed to pay Big League Advance Fund (BLA) 15% of his pre-tax NFL earnings for the next 25 years in exchange for a one-time payment of $436,485 in 2022, according to a copy of a federal lawsuit filed in the U.S. District Court in Gainesville, Florida, on Friday.”

Yeah, ultimately I agree with this. I think he was offered a really horrible deal and he accepted it. Obviously that doesn't make it illegal, but that also doesn't mean it's not predatory.

And personally, I'm inclined to be on the side of anti-predatory behavior rather than saying, "Well, it's not illegal and we're all big boys so..." Because that leads to a slippery slope where truly vulnerable people get taken advantage of.

Yep, this looks like a really bad deal. Illustrates my original point: get someone to review the contract prior to signing! It's not expensive (couple hundred bucks) and can literally save you thousands (or millions, in this case).

IMO the NCAA should provide these kids support when entering in NIL agreements. That's crazy talk, though... we all know the NCAA is only good for ****ing things up, not actually being useful. ;)

Sure, Diversity jurisdiction applies pretty easily here.

But the 'citizenship' language you're citing applies only to the extent relevant to determine citizenship for the purposes of establishing diversity.

I don't doubt that the case can be filed in federal court - that doesn't settle the choice of law question, though.

I mean it sure looks like BLA is a sophisticated party. They've been doing this for a long time now and I have to believe they were well aware of the law when they offered the deal. And choice of law provisions typically stand up in court.

So you'd really need something of an end-run (or staggeringly inept practice from BLA) to establish that the terms are unconscionable or that it's some sort of odd contract of adhesion whereby the terms shouldn't be applied as against public policy.

I don't think Dexter has nearly the slam dunk case many of y'all seem to think he has. In fact, I'd rather argue Defendants side here without having actually seen the controlling document.

Yeah. And I know we're saying that these are all adults, but we have no clue how much education these guys really have. And then suddenly someone is offering the guy 400k+ and he isn't exactly equipped to create an Excel spreadsheet to calculate his breakeven.

(He also had a kid in 2022 and maybe that played some role in the decision.)

I've had this exact argument before and lemme tell you, this becomes FAR more 'snake eating its own tail' than you could ever imagine in the days of multi-state and online lending.

Every state has a slightly different read on it. Some say it's where the notice was received, some say it's where it was sent from, some say it's where the payments are due, some apply a most significant contacts test. And then oftentimes states will point to the law of OTHER states and you'll end up in a death spiral where it truly cannot be conclusively established.

These are Gordian knot arguments on their best days. For instance, BLA has its principal place of operations in Virginia. It's incorporated in Delaware. Dexter's permanent residence appears to have been in Florida (he lived in Florida before he went to University of). Payments were probably forwarded to a payment processor and those are often, oddly enough, in Utah. It's not going to be terribly easy to untangle.

Ultimately I would argue it's a question of law rather than a question of fact so it SHOULD resolve on motion rather than any sort of trial. So it will probably move relatively quickly. I suspect BLA has a MX to Dismiss already punched up for these sorts of things and we'll see it on file in fairly short order.

Who said anything about 'riskless'?

I've already stated that this presents about a 14% ROI over the rookie deal. And while that's high, it's not unheard of and certainly not 'unconscionable'. The rest of it would be completely speculative.

And yes, the $430K is pre-tax - and? It came from BLA coffers that are post-tax in their own right. BLA's already paid the taxes on that money - why should they be taking on the burden of taxes again?

Again, I'm looking at this from BLA's chair because THAT'S the analysis that should be done. That's how you calculate their Rate of Return; not on how much of the money Dexter actually got. How much they SPENT is what's critical and they SPENT that $430K on Dexter instead of putting it into other investment vehicles.

I completely agree that's the right way to look at it from a business perspective. I read your post blurry-eyed and thought you were talking about how "I'm not shedding a tear for Dexter because he's just fine and can double his money in 6 years."

I think NCAA should stay out of it. Let these kids make their own decisions.

If anything, all scholarships should be null and void after a certain point of money made from nil.

I would see about deferred payments or payments go to a trust.


One of the worst deals ever. Like government ****ing taxpayers bad.