Football Gervon Dexter sues to get out of 25 year NIL Deal. - Page 2

Sassy Squatch · 09-06-2023, 04:36 PM

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."

DJ's left nut · 09-06-2023, 05:06 PM

Quote:

Originally Posted by raybec 4

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.

raybec 4 · 09-06-2023, 05:10 PM

Quote:

Originally Posted by DJ's left nut

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.

TwistedChief · 09-06-2023, 05:12 PM

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

**Rain Man** · 09-06-2023, 05:13 PM

Quote:

Originally Posted by DJ's left nut

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.

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.

GloucesterChief · 09-06-2023, 05:21 PM

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

DJ's left nut · 09-06-2023, 05:27 PM

Quote:

Originally Posted by Rain Man

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.

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.

DJ's left nut · 09-06-2023, 05:32 PM

Quote:

Originally Posted by GloucesterChief

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

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.

Sassy Squatch · 09-06-2023, 05:33 PM

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

**Rain Man** · 09-06-2023, 05:45 PM

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.

**Rain Man** · 09-06-2023, 05:51 PM

Quote:

Originally Posted by DJ's left nut

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.

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.

**Shiver Me Timbers** · 09-06-2023, 06:16 PM

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

mr. tegu · 09-06-2023, 06:30 PM

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?

HC_Chief · 09-06-2023, 06:39 PM

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.

**Rain Man** · 09-06-2023, 06:41 PM

Quote:

Originally Posted by Shiver Me Timbers

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

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.

Quote:

Originally Posted by mr. tegu

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?

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.

TwistedChief · 09-06-2023, 06:51 PM

Quote:

Originally Posted by HC_Chief

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.

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?

09-06-2023, 04:36 PM
Sassy Squatch The man you could post like. Join Date: Oct 2010 Casino cash: $-1260345	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."
Posts: 42,070

09-06-2023, 05:12 PM	#18
TwistedChief Why so serious? Join Date: Dec 2016 Location: Chicago Casino cash: $-1259585	And it’s pre-tax money. This is such a ridiculously predatory deal. Yikes.
Posts: 13,280	1 0

09-06-2023, 05:21 PM	#20
GloucesterChief MVP Join Date: Jan 2013 Casino cash: $-1823546	I believe these types of contracts are common for prospective MLB players in Latin America.
Posts: 13,279

09-06-2023, 05:33 PM	#23
Sassy Squatch The man you could post like. Join Date: Oct 2010 Casino cash: $-1260345	Yeah. Tatis and De La Cruz actually have similar contracts with this exact agency I'm pretty sure.
Posts: 42,070

09-06-2023, 05:45 PM	#24
Rain Man Seize life. Be an ermine. Join Date: Jul 2001 Location: My house Casino cash: $-492449 VARSITY	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. __________________ Active fan of the greatest team in NFL history.
Posts: 145,288	1 0

09-06-2023, 06:16 PM	#26
Shiver Me Timbers Elway be drinkin' again Join Date: Dec 2017 Location: Colorado USA Casino cash: $5435000	Bet Mr Dexter actually does not have any of his 436k left. Now he wants out of the deal. sounds about right Last edited by Shiver Me Timbers; 09-06-2023 at 06:17 PM.. Reason: transposed a digit or two
Posts: 5,270	1 0

09-06-2023, 06:30 PM	#27
mr. tegu Forever Royal Join Date: Mar 2012 Casino cash: $-1708700	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?
Posts: 26,492

09-06-2023, 06:39 PM	#28
HC_Chief That's just f***in' stupid Join Date: Aug 2000 Location: suburbia Casino cash: $3687107	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. __________________ "Gentlemen, you can't fight in here, this is the war room!"
Posts: 12,355	2 1